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Broker Roundup Pt 2 including Randgold Resources, Cluff Gold, Aureus Mining, Sunrise Resources, Stellar Diamonds and VANE Minerals
Analysts at City heavyweight Goldman Sachs have lifted their 12 month price target for UK telecoms giant BT Group (LON:BT.).
The target price moves to 248 pence per share from 238 pence (current price: 215.5 pence).
"We believe 3Q12 results support our thesis that BT is an attractively valued stock with positive earnings momentum and improving structural positioning," said Goldman analyst Andrew Lee in a note today.
On Friday, the group revealed a 41 per cent increase in third-quarter net profit and said it would reach some of its earnings targets a year earlier than expected.
Lee said the results supported three key parts of Goldman's investment case, namely, the company's improving industrial position, the cost-cutting driven earnings momentum and thirdly, cash generation/usage.
Also in telecoms, Vodafone (LON:VOD) has been rated 'overweight' y JP Morgan Cazenove, which has lowered its price target slightly to 225 pence, from 228 pence previously (current price: 175.55 pence).
It has updated its estimates for Verizon, saying that VZW's retail service revenue growth has accelerated from Q2 , 5.5 per cent to Q3, 6.9 per cent and Q4, 7.8 per cent.
The investment bank said it now forecast EPS of 15.1 pence for year to March 2012 and 15.9 pence to March 2013.
Turning to mining, Collins Stewart rates Randgold Resources (LON:RRS) a 'buy' with a target price of 7600 pence.
"Randgold has delivered a strong set of Q4 financials. EPS was up 331 per cent YoY (year-on-year) and 9 per cent on Q3, clearing our estimate and consensus by 15 per cent. The dividend has been doubled to 40 cents, 74 per cent ahead of our estimate," said the broker.
The company saw its gold output jump 58 percent to 696,023 ounces, reflecting increased contributions from the Loulo complex and the Morila joint venture in Mali and the Tongon project in Côte d'Ivoire, leading to a 259 percent increase in profits to US$433.4 million.
In the fourth quarter, Randgold's profit more than quadrupled to US$136.2 million on sales of US$314 million.
Elsewhere, Unilever (LON:ULVR) has been added to the "conviction list" at Goldman Sachs, which targets a price of €29.90 for the stock.
Analyst Alexis Colombo suggests now is a good entry point for investors to buy the shares due to the recent underperformance.
The group is a "long term" outperformer, in Goldman's view.
"We expect continued strong growth and margin expansion ahead of expectations to drive outperformance through 2012. The next catalyst on the stock is 1Q results on April 26," said Colombo.
Myles Allsop, meanwhile, at Swiss investment bank UBS, has taken a closer look at the proposed merger between Glencore (LON:GLEN) and Xstrata (LON:XTA).
"GLEN has approached XTA regarding an “all share merger of equals, which may or may not lead to an offer being made”, he said.
"There are no further details at this stage, with GLEN obliged to make an offer by 1-Mar under UK Takeover Code."
Allsop said UBS expected GLEN to target a nil premium merger, especially with the majority of shares still held by employees, and Xstrata management/ shareholders to look for some control premium or a valuation closer to net present value (UBS estimates £14.5).
"We do not expect material competition issues and we do not expect this approach to trigger a bidding war for XTA," he added.
The analyst added that UBS saw Glencore as the most dynamic company in EU mining over the next three years, given management quality and entrepreneurship, but that it preferred XTA on valuation.
Turning to the small caps, Sunrise Resources (LON:SRES) says that its continued feasibility work is justified at the Derryginagh barite project as drilling returns high grade results. Today, the firm revealed results from the company’s first drill programme at the project in south-west Ireland.
Barite is an industrial mineral that has many uses, it is most commonly used as a weighting agent in drilling and as a filler in paint. Sunrise believes that the Derryginagh barite is of a sufficient quality to be used as a ‘premium’ paint filler, and as such its market value is estimated at around £200 per tonne.
“The market seems to be warming to the barite story given recent strong pricing and demand fundamentals which we see continuing,” said Andrew McGeary, analyst at Northland Capital.
According to McGeary, it is expected to be a relatively simple task to extrapolate the thickness of Derryginagh’s barite mineralisation so that Sunrise can gain a good understanding of the deposit.
“Thus, while it is not ruled out at this stage, a JORC resource may not be necessary to progress the deposit. The next stage is likely to comprise some form of scoping study incorporating the new data,” he said.
Elsewhere, West Africa focused Stellar Diamonds (LON:STEL) reported today “encouraging” bulk sampling diamond grade results from the Lion-5 kimberlite dyke at its 87 sq km Kono diamond licence in eastern Sierra Leone
Analyst Dr Ryan Long, at broker Northland, said: "This is further good news for Stellar which has recently produced good results from bulk sampling at the Tongo project where a maiden resource estimate is expected Q112.
"Results from the Lion-5 Dyke highlight the potential of the Kono project and, in our opinion, could lead to the recommencement of trial mining."
The analyst added: "Overall we continue to believe Stellar Diamonds’ shares are undervalued and maintain our price target of 15.1 pence per share, with the Kono project contributing 2.7 pence per share."
Northland maintains its 'buy' rating on the stock.
Meanwhile, another mining firm - VANE Minerals - received a boost to its latest quarter as grades and recovery rates jumped at its Mexico gold and silver operations.
Revenues jumped to US2.69 million in the three months to December as it produced 1,352 ounces of gold at a cost of US$585 per ounce compared to 628 ounces at a cost of US$628 in the preceding three months. VANE also produced 19,410 ounces of silver at a lower cost per ounce.
The company is pushing ahead with the closure of the Diablito mine and work has started to remove 3,200 tonnes of high grade ore.
Dr Ryan Long, at broker Northland, said today's statement, following on from Friday's positive announcement of the discovery of a porphyry deposit in the Southwest USA, could provide another boost for the company's shares.
Elsewhere, Cluff Gold (LON:CLF, TSE:CFG), Aureus Mining (LON:AUE, TSE:AUE) and Avocet Mining (LON:AVM) are among the best bets in the emerging gold hot spot of West Africa, broker Oriel believes
The broker, which has just visited the region, said in a note that West Africa is an under-explored gold region that is highly prospective for the discovery of multi-million ounce gold deposits.
Its countries of preference are Burkina Faso and Liberia, which have political stability as well as favourable permitting processes, fiscal regimes and an ease of doing business.
