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Broker Spotlight brings some of the more intriguing and topical analyst coverage to centre-stage. The daily column aims to illuminate thoughts and opinions behind the big stories. London is one of the financial capitals of world. The influential and closely followed views of its analysts regularly move markets and split opinion. The Broker Spotlight column arms Proactive readers with the added insight from the often colourful thoughts and headline-grabbing valuations from the City’s analyst community.
Broker Roundup Part 2 including: Noricum Gold, Petroceltic Internationaland Providence Resources,
June 29 2012, 4:01pm
Heavy downpours in the Midlands and Scotland which caused landslides and flash floods yesterday has left the country with wide-spread transport disruption.
Meanwhile after a landslide in the Ocado (LON:OCDO) share price this week heavyweight broker Goldman Sachs downgraded online supermarket to ‘neutral’ from ‘buy’. Shares have fallen 30 per cent since it announced its posted its first half results on Tuesday.
The joint house broker believes share underperformance since March is due to concerns over rising competition washing away Ocado revenue growth in addition to concerns about its capacity to expand.
In Tuesday’s first half results, chief executive, Tim Steiner said the current quarter was difficult to forecast as he warned of possible disruptions to trade during the Olympics.
Following the results Goldman forecasts revenue growth for 2012 to be 14 per cent, down from 17 per cent.
Analyst Karen Hooi said: “Our revised price target of 110pence implies circa 29 per cent upside, broadly in line with our coverage universe median upside; hence we downgrade the stock to ‘neutral’.”
Meanwhile storm clouds continue to gather round British banks as details of the libor scandal investigation which hit Barclays(LON:BARC) on Wednesday emerge and indicate industry-wide involvement.
Broker Oriel Securities has said that the pile-up of threats to the Barclay’s investment case has led it to downgrade its recommendation on the bank.
Analyst Mike Trippitt said: “The shares appear undervalued, but our conviction has faded. We downgrade to ‘hold’ favouring Lloyds and Standard Chartered.”
The broker maintains its ‘buy’ stances on Lloyds (LON:LLOY), Royal Bank of Scotland (LON:RBS) and Standard Chartered(LON:STAN) and has a ‘reduce’ recommendation on HSBC (LON:HSBA).
Broker Jefferies downgraded mobile giant Vodafone (LON:VOD) to ‘hold’ from ‘buy’ and cut the target price to 180 pence from 195 pence.
Analyst Jerry Dellis said that the risk of competitor fight-backs threaten its optimistic margin guidance.
“Only on the (low-probability) scenario that EU Mobile returns to structural top-line growth - relieving competitive pressure - would we envisage commercial costs coming down."
Elsewhere London and south-east housebuilder Berkeley Group (LON:BKGH) is shining brightly for broker Numis.
It expects the group to “materially outperform” its previous average sales price assumptions after full year results were slightly ahead of its estimates.
In the results the group said it would continue investment through to April 2014 before reducing and focusing on cash generation in preparation of the £569 million cash return scheduled for September 2015.
Analyst Chris Millington said: “In our view Berkeley is going to continue outperforming against estimates and remains highly attractive.”
It hiked its target price to 1650 pence from 1500 pence and upgraded its recommendation to ‘buy’ from ‘add’.
Broker Fairfax said it was looking forward to results from Noricum Gold’s (LON:NMG) drilling programme as historical and recent results point to some “highly prospective” ground.
The exploration company raised £2.2 million through a placement of 220 million new shares to push forward its Rotgulden Gold Project and also the Altenberg target.
Analyst John Meyer said management can now demonstrate the prospectivity of these licenses which have shown “spectacular grades” in initial and historical drilling.
Elsewhere City broker Daniel Stewart said the Italian government’s clarification on production concessions and exploration licenses is “extremely good news” for Petroceltic International (LON:PCI).
The government said that such licenses issued prior to the implementation of Legislative Decree 128/10 will be exempt from the offshore exploration and production ban – freeing up a number of Petroceltic’s licenses currently constrained by the decree.
Analyst Kate Fisher said drilling of its Elsa-2 well, presents a clear catalyst for the share price.
“We re-iterate our 'buy' recommendation and 15.8 pence target price”.
In a seperate note about Providence Resources (LON:PVR) Fisher said that despite the firm’s announcement of a temporary suspension at its Singleton Oil field, onshore UK the broker only anticpates short term weakness.
She said “We continue to view the stock favourably. Our target price is primarily based upon Providence's assets offshore Ireland, which are unaffected by today’s announcement.”
The broker gives a ‘buy’ recommendation and target price of 1344 pence.
