RGU.L Share News (RGU)

(ShareCast News) - Jefferies upgraded Compass Group to 'buy' from 'hold' and lifted the price target to 1,200p from 1,100p.It said the recent 15% pullback in the shares provides an opportunity to become more positive.It noted that Compass shares have dropped 15% since their April peak as the market continues to worry about weakness in its commodity and energy related businesses, which account for around 15% of group revenue.Jefferies recently reduced its earnings per share forecasts by around 3% due to this weakness but said it's likely to be temporary and will be limited by Compass's geographic, industry and customer diversity.It added that the underlying business model continues to perform consistently well."The trend to outsourcing continues and we expect Compass to achieve organic sales growth of around5% with around 10 basis points of underlying margin improvement through 2017. Together with the continuing share buyback programme and progressive dividend policy, this results in total returns comfortably into double-digits," said Jefferies.It said other trading remains strong and continues to forecast North American sales growth of 7.5% this year and 6% in 2016/17. In Europe and Japan, Jefferies expects organic sales growth to get close to 2%. Drax was under pressure after RBC Capital Markets cut its stance on the stock to 'underperform' from 'sector perform' and reduced the price target to 270p from 300p."Dark green spreads continue to decline, clarity on state aid clearance for the third biomass unit contract for difference continues to be delayed and multiples look stretched on our lower estimates," said RBC, adding that it sees few reasons to own the stock in this environment.The Canadian bank said outer year earnings before interest, tax, depreciation and amortisation forecasts have been cut by around 20% as a result of lower power prices.Based on its new view that EBITDA will be broadly flat around £160-£170m for the next three years, it estimates that Drax is trading on an EV/EBITDA multiple of around 8x. RBC said this does not adequately reflect the commodity sensitive nature of Drax."Furthermore, on a price-to earnings basis Drax is quite clearly the most expensive stock within the sector," it said.In addition, it said the stock is unattractive in terms of its dividend yield, which is around 1.5%. Investors sold down shares in Regus after an Investec downgrade that highlighted the serviced office company's shares had already priced in most of the good news that could be expected from its interim results next week.Shares in Regus were down 6.6% to 256p by 1110 BST on Thursday.Following a 48% outperformance relative to the FTSE All Share over the last 12 months, Investec reduced its recommendation to 'hold' and set its target price at 295p, though this still offered upside to Wednesday's closing price of around 274p.But the South African bank said it expected Regus's interim update on 25 August would serve to highlight the continued strength of underlying trading.It added that "a continued improvement in centre performance and greater overhead efficiency should serve to accentuate its significant operational leverage".Previewing the interim results, Investec has forecast interim operating profit of £62.3m on £924.2m of revenue,Full year underlying PBT estimates remained unchanged but EPS estimates were upped to 11.0p from 10.9p and for 2016 to 14.4p from 14.2p due to a change in share count assumptions tied to the recent buyback.But, it warned, there could be "downside risks" to these full year estimates if guidance on centre openings is increased beyond its current expectations of circa 500 centres.However, none of this positivity, or even an increased on analysts' valuation to 295p from 260p, was enough to stop the shares fall in early trading on Thursday.