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Broker Round-up Part 2: Mariana Resources and Cluff Gold

Last updated: 15:23 15 May 2012 BST, First published: 19:23 15 May 2012 BST

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Royal Bank of Scotland (LON:RBS) is better placed than its rivals to withstand Greece’s potential Euro exit according to Morgan Stanley.

The broker upgraded the company to ‘equal-weight’ from ‘underweight’ this morning following “encouraging” progress on its non-core division.

Analyst Chris Manners, who also raised the target price by 3 pence to 30 pence, reckons this progress offers potential to focus on core over time.

The broker sees value in RBS shares given the weakness across the banking sector.

The analyst is urging investors however to proceed with caution as he still sees many hurdles ahead for the bank, including euro zone sovereign debt concerns.

“Patience is probably still required here, and the prospect of a dividend remains distant, we think,” he concluded.

Shares rose a touch this morning to 22 pence.

Supermarket chain Morrisons (LON:MRW) has been taken off Goldman Sachs’ ‘conviction sell’ list as it reckons there is limited downside in the shares.

Although the broker maintains that the outlook is still “negative”, it has less conviction at the stock’s current price.

It has also reduced its target price to 267 pence from 279 pence following weak first quarter results.

Despite failing to find oil at its first well offshore Namibia, Swiss broker UBS remains bullish on Chariot Oil and Gas(LON:CHAR).

The share price provides an “extremely attractive entry point” for investors, according to the broker, after the share price tumbled 50 per cent yesterday on the back of the disappointing news.

The broker cut its target price to 215 pence, a fall of 125 pence, but retains a ‘buy’ stance given the company still has around 10 billion barrels of prospectivity left to play for in Chariot’s central and southern blocks.

Shares edged up slightly today to 83 pence.

Societe Generale believes Cairn Energy’s (LON:CNE) track record of creating and realising value and then returning the proceeds to shareholders makes it appealing to investors.

“We think that longer-term investors can benefit from the current market discount to the value of Cairn’s financial assets ahead of the re-balancing of the portfolio towards Exploration and Production assets,” the broker said.

The broker reiterates its ‘buy’ recommendation and 400 pence price target against the current price of 301 pence.

Builders merchant Travis Perkins (LON:TPK) is attractive on a valuation basis according to Deutsche Bank, which has upgraded its target price to 1,188 pence from 1,140 pence.

Despite taking a sales hit due to bad weather, the broker believes the company looks “too cheap given its strong market position and healthy balance sheet”.

Analyst Glynis Johnson suggests investors use the share price weakness as an entry point to the stock.

The broker has a ‘buy’ stance on the stock.

Broker Fox-Davies has a ‘buy’ stance on Mariana Resources (LON:MARL) despite the loss it reported for the first quarter of this year.

Mariana spent heavily on a resampling programme at Las Calandrias, which “adds significant upside potential to the current resource”, says Fairfax analyst John Meyer.

The acquisition of the El Aguila property shows “good prospectivity” based on rock chip sampling and drilling results, according to Meyer.

The share pricecould rise if news flow from drilling results is positive, Meyer concluded.

Broker Westhouse Securities reckons West Africa-focused Cluff Gold (LON:CLF) still looks attractive after meeting with the gold miner.

At an EV/Resource oz of just $47/oz, Cluff continues to look good value, said the broker, which has a ‘strong buy’ recommendation and 117 pence target price.

Concerns over the scale of the potential fundraising at Baomahun should be lowered by the preliminary economic assessment at the producing Kalsaka mine in Burkina Faso as this should highlight Cluff’s flexibility going forwards, the broker said.

Shares dipped to 68 pence today.

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