Eight stocks have emerged as brokers’ leading picks for October, with Nigerian Breweries receiving the strongest support among the six investment firms reviewed by Nairametrics.
The brewer secured five Buy or Upside recommendations, while Access Holdings, ETI, GTCO, BUA Cement, MTN Nigeria, Dangote Sugar and Aradel received four positive ratings each.
This represents a much shorter consensus list than in late September, when 14 stocks attracted at least four positive recommendations.
UBA, FCMB, Zenith Bank, NASCON, and AIICO were among the stocks that failed to retain their earlier positions.
All eight stocks still have prices below the levels brokers believe they could reach. However, some now appear more attractive than they did in late September because their share prices have fallen.
ETI, Access Holdings and GTCO still offered gains based on the brokers’ targets, but slightly less than in the previous review. BUA Cement’s expected return remained unchanged.
The review covers recommendations issued on October 12 and 13 by Cowry Asset Management, Morgan Capital Securities, Blue Marina Research, Arthur Steven Asset Management, First Securities Brokers and Futureview Financial Services.
Only stocks rated Buy or Upside were counted as positive recommendations.
Nigerian Breweries received positive recommendations from five firms; the highest number recorded by any stock in the October review.
The recommendations reflect confidence in the brewer’s recovery, including improved pricing and profit margins.
However, weak consumer spending, higher production costs and foreign-exchange pressures remain important risks.
Access Holdings, ETI and GTCO each received four positive recommendations.
UBA and FCMB, which had four positive recommendations in September, received three each in the latest review. This does not necessarily mean every missing broker downgraded them, as some firms released shorter recommendation lists in October.
BUA Cement retained four positive recommendations and an average target of N391.50. This represents a possible appreciation of 31.8% from N297. Arthur Steven, however, rated the stock Hold.
The targets for MTN and Aradel varied widely, showing that brokers generally expect their prices to rise but disagree on how far they could go.
Dangote Sugar received positive recommendations from Blue Marina, Arthur Steven, First Securities, and Futureview.
Compared with ETI, MTN and Aradel, the brokers were more closely aligned with Dangote Sugar’s value.
Zenith Bank recorded one of the biggest changes from the late-September review, as its positive recommendations fell from four to two.
Futureview remains positive on AIICO with a target of N5.10, while Arthur Steven recommends Buy with a higher target of N6.62.
Nigerian Breweries presents the strongest case, combining broad broker support with improving cash flow, lower debt and a return to positive retained earnings.
Investors should also pay attention to entry prices. The changes in Zenith Bank, NASCON, and AIICO show that a good stock can lose its Buy rating after its price rises and reduces the opportunity for further gains.
Broker recommendations should therefore be considered alongside earnings, cash flow, debt, and valuation.
