Despite Standard Life showing the first signs that its strategy is working, Nomura has kept its reduce rating on the stock, saying that the stock's valuation is still demanding. The target price stands at 250p.

"Strong IFRS operating profit growth shows first signs of scalable strategy working," said analysts Nick Holmes and Shivaji Thapliyal.

"[However,] in spite of clearly improving performance, we think the stock's relative valuation still appears demanding on a 2011E IFRS P/E of 13x versus the sector on 9x on our estimates, and we see better value elsewhere," they said.

UBS has upgraded defence firm BAE Systems from neutral to buy following the group's interim results on 28 July.

"Upgrading to a buy [...] as we believe downside risk is minimised by reaching trough profit valuations, the high dividend yield, share buy-back and [price-to-earnings ratio] yield," said analysts Charles Armitage and Rami Myerson.

The target price, however, is scaled back from 330p to 300p due to the increase in estimated pension underfunding since the first half.

Peel Hunt kept its sell rating on support services and construction group Interserve, despite interim profits coming in ahead of expectations. The target price stays at 250p.

"We maintain 2011 estimates for now but markets look fragile and we are wary of margin pressures going forward," according to analyst Andrew Nussey.

The broker predicts that near term will stay "challenging" for the sector as a whole "as volume pressures combine with pricing pressures".

BC

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