Broker tips: AMEC, Berkeley, HMV

Contractor Amec unveiled plans last week to more than double its earnings to over 100p per share by 2015, a feat which UBS thinks is well within reach.'The new target is inclusive of acquisitions and organic growth, and on realistic assumptions on acquisitions we believe the 100p target is likely to be materially exceeded,' UBS analyst Alex Brooks predicts.The company is looking to expand into new areas, such as subsea engineering, renewables and smart grids, in the near term, and with plenty of money in the war chest Amec could, by UBS's estimates, plough around £1bn into acquisitions over the next four years without needing to 'go into a net debt position.'UBS is leaving its earnings forecasts unchanged, however, following AMEC's strategy presentation last week. 'If growth in EPS continues as we expect in the 09-13E period, we estimate clean EPS in 2015E of 114p. Our forecasts embed an expectation of a strong oil service demand recovery from mid 2011E,' UBS said.UBS rates the stock a 'buy' and has a 12 month price target of 895p.Royal Bank of Scotland (RBS) is also a buyer of the stock and has raised its price target from 900p to 975p. 'Armed with a cash pile of c£700m, clearly a quick fix would be share buy-backs and we estimate AMEC could very easily get to [earnings per share of] c75p by buying back stock without gearing up materially,' RBS notes. However, the company is committed to spending the cash on acquisitions, targeting purchases where the return on invested capital will exceed the weighted average cost of capital (WACC) in the first year or two of ownership, and organic investment.The continued absence of land value write-downs at Berkeley Group underlines the reputation of the housebuilder as a shrewd purchaser of land, Citigroup believes.The company announced a slide in interim profits to £52m from £80m a year earlier, with the average selling price tumbling to £299,000 from £395,000 a year ago. Nevertheless, Citi believes the 'interim numbers show resilience,' with margins only modestly lower at 17.4% from 17.8% last year.The group has around £345m of net cash, up from £285m a year earlier, and has also signed up a new £300m banking facility, 'giving the group significant spending capabilities' to add to its impressive land bank, which should satisfy demand for 'well over 10 years', Citi reckons.'Berkeley continues to focus on the long term evolution of the business. As such it is a less geared play to short-term housing recovery than others. Despite that it is a very well placed housebuilder, which has a large amount of hidden value in its significant land bank, in our view,' Citi analyst Clyde Lewis concludes.The broker has a target price of 1225p for the stock.Morgan Stanley has maintained its 'underweight' recommendation on video games, music and DVD retailer HMV following its consumer survey, which suggests video games demand will remain lacklustre.The broker said its survey indicated that more people plan to conduct their video game shopping at supermarkets and online retailers, while high street specialists lose out despite competitors dropping like flies.'Our findings support our pessimistic expectations for HMV, as 20% of UK sales are video games and while we already expected a declining market we are now also concerned about these channel trends,' the broker said.Morgan Stanley continues to prefer overweight-rated Next and Debenhams. HMV's 95p price target implies a 15% downside, it added. Berkeley Group Next