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Broker Roundup Pt 2 including ZincOx Resources, Caledonia Mining, Stellar Diamonds and Kingfisher

Last updated: 13:27 02 Apr 2012 BST, First published: 17:27 02 Apr 2012 BST

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B&Q owner Kingfisher PLC (LON:KGF) came under the spotlight of analysts at  HSBC today.

They have upped their price target for the stock to 370 pence, from 310 pence previously, and say the group has "upside" potential regardless of the macro outlook.

Recently, the home improvements company announced pre-tax profits of nearly £800 million and an improvement in turnover of 3.6 per cent,  largely thanks to French depots.

Long term, the company has strategic upside, they say, and concerns over French DIY spending are overdone, it reckons.

HSBC maintains its 'overweight' stance on the stock.

Meanwhile, the banking giant also issued a note on high street retailer Next (LON:NXT) today, also maintaining its "overweight' rating on the stock and upping the price target.

The target for the shares rises to 3,520 pence, from 3,090 pence.

Elsewhere, FTSE 250 materials firm Cookson (LON:CKSN) came under scrutiny from analysts at Investec, which rates the shares a 'buy'.

It comes after the Sunday Times suggested the firm was planning to spin off its electronics division and float it as a standalone on the LSE.

Analyst Michael Blogg noted: "Wide press coverage of a potential break-up suggests that Cookson's management is contemplating this step.

"We agree that it would eliminate the conglomerate discount and potentially allow the performance materials (formerly Electronics) segment to be rated against the higher-multiple
Electronic & Electrical Equipment sector.

"We think an uplift of 25 per cent or more could result from this exercise. For now, we retain our 780p target price (based on a 15 per cent discount to the 2013E PER of the Industrial Engineering sector)."

Turning to the oil sector, shares in Rockhopper Exploration (LON:RKH) are set for a number of boosts in the coming month, according to French investment bank SocGen.

Analyst David Mirzai says that despite the political ‘noise’ coming from Argentine president Cristina Kirchner’s ‘megaphone’ diplomacy the Falkland focused oil firm will have a busy April.

"Once the political ‘crescendo’ has been spent, we expect the next month to provide potential positive catalysts for the stock," said Mirzai.

The analyst believes these catalysts will come in the form of an updated independent reserves report, a potential update on the data room and farm-out process and, thirdly, exploration drilling results from other Falkland oil exploration (being carried out by Borders & Southern).

Mirzai, who rates the stock as a ‘buy’ with a 450p price target, says that Rockhopper’s share price carries a significant discount to the economic value of the Sea Lion discovery.

In mining, Uranium Resources (LON:URA) reported further positive results from the ongoing "transformational" 2012 drilling campaign at its flagship Mtonya project in Tanzania.

Broker Ambrian Capital, which currently has a ‘speculative buy’ recommendation on the stock, said today’s results provided further evidence of the company’s geological model.

Fellow broker WH Ireland reckons the project could potentially be company making, if it proves to be similar to Uranium One’s Nyota deposit, which is also located in Tanzania.

In other broker coverage, ZincOx Resources (LON:ZOX) is looking forward to starting production from its first zinc recycling plant within the next two weeks.

The plant is in the final stages of commissioning, the firm said today.

Peel Hunt commented in a note: "There is a slight two week delay to KRP1 before final commissioning. This makes little difference to ZincOx’s long-term potentially very profitable global position in the zinc recycling industry.

"Post hot commissioning we expect a gradual ramp up to full production, with a successful outcome only partially priced into the shares."

It rates ZincOx a 'buy' with a target price of 126 pence.

Elsewhere, Daniel Stewart also rates the stock a 'buy' and targets a price of 139 pence.

Cannacord Genuity issued a note on miner Caledonia Mining (LON:CMCL, TSE:CAL) after the company said it more than doubled gold production at the Blanket mine in Zimbabwe in its 2011 results.

Improved operations and economics led to a significant decrease in costs. In 2011, the cash costs were US$581 per ounce compared to US$751 the previous year, it said.

"With the Blanket mine now running above the 10,000 ounce per quarter target and the company reaching an agreement on the 51 per cent indigenisation of the Blanket mine, the company has cleared the main risks in a difficult environment and is now well positioned for the next phase of growth."

It rates the stock a 'buy' targeting a price of 16 pence.

"The upcoming catalysts for Caledonia include the Q1 production update and the implementation of the indigenisation agreement, both in Q2 2012," it added.

Also in mining, but diamonds, not gold, Stellar Diamonds (LON:STEL) were lifted today after the group reported a significant maiden resource for the Droujba kimberlite pipe in Guinea.

The JORC compliant study put the Droujba resource at 2.474 million carats in the inferred category, with a grade of 70 carats per hundred tonnes (cpht).

Broker Northland noted that this maiden resource for Droujba was another encouraging milestone adding to the recent JORC resource announced for Tongo.

"Both announcements are evidence of successful delivery against expectations, with the projects delivered on time and within budget, said analyst Dr Ryan Long.

"In light of the maiden resource at both Tongo and Droujba, our 15.1p price target is under review," added the analyst, which rates the stock a 'buy'.

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