Shares in Royal and SunAlliance (R&SA) received a boost after UBS Warburg upgraded its recommendation on the insurance giant.
The broker raised its overall recommendation to ‘buy' from ‘hold', despite cutting its forecasts for R&SA's operating profit and dividends in the wake of last week's terrorist attacks in the US.
It forecast operating profits at £665m against £870m previously and said it was assuming that losses from the US would be higher than the £150m estimated by R&SA.
It slashed its price target for the stock to 450p from the previous 560p and forecast a cut in full year dividend from 26p to 20p.
Giving its recommendation, UBS Warburg said: “We are heavily reducing our profit forecasts for this year to take account of likely losses from recent events in the US. We also now expect R&SA to implement its mooted dividend cut.”
Shares in R&SA showed a gradual recovery today and were trading at 1.94% up this afternoon on the price at close of business yesterday.
