logo-loader

Broker Round-up Part 2, including Nautical, Cairn, Premier, Providence and Magnolia

Last updated: 09:44 07 Jun 2012 BST, First published: 13:44 07 Jun 2012 BST

no_picture_pai

As interest swirls around the sale of BP’s (LON:BP.) stake in Russian venture TNK-BP, brokers across the board voiced their opinions today.

Citigroup pointed to the possibility of a Chinese buyer, which it predicts would have to be a minority shareholder for a deal to go through.

“We think a Chinese buyer would be motivated by strategic concerns – matching the country's ever-rising demand for oil with exposure to reserves – more than by immediate financial concerns, meaning that dividend pressure could be lessened.”

JP Morgan Cazenove, which values the 50 per cent stake at between US$28 billion and US$32 billion, sees the sale as a positive move for the British company, whose shareholders have “long wanted BP to downsize more aggressively”.

Meanwhile, UBS believes the timing is right for BP to leave Russia, making it an interesting proposition for investors.

Notably, a sale could lead to a £10 billion return of capital to shareholders through a special dividend or share buyback.

Price comparison website Moneysupermarket.com (LON:MONY) could be under threat from Google following the £87 million deal to buy Money Saving Expert, says broker Numis.

Analyst David McCann reckons that the deal is a good one for the company, provided it can keep hold of most of its visitors.

But Google’s new Panda algorithm, which has downgraded price comparison sites to “low quality”, puts the company at risk, since McCann estimates Google traffic will still account for more than half of the company’s earnings following the purchase of Money Saving Expert.

Nevertheless, the analyst has upgraded the stock from ‘sell’ to ‘reduce’ and pushed up his target price by 5 pence to 104 pence given the financial boost from the deal.

Budget airline EasyJet (LON:EZJ) is a no-fly zone for investors, according to JP Morgan Cazenove.

The broker retains its ‘underweight’ stance as better value can be found elsewhere in the sector.

“At the current share price, we see no compelling valuation discount to either recent history or the market,” analyst David Pitura said.

He does however expect the cut price airline to beat consensus for this year as long as operations continue as expected, raising his target price to 554 pence from 465 pence.

Directories company Yell Group (LON:YELL) is doing the right things but the outlook remains uncertain according to Citigroup analysts.

The Reading-headquartered firm’s shares have fallen 74 per cent so far this year and as the group addresses its capital structure, the broker sees scope for “significant volatility”, upgrading the stock to ‘neutral’ from ‘sell’.

However, its lack of guidance regarding the capital structure means the broker is unable to set a target price.

House builder Taylor Wimpey (LON:TW.) has been upgraded to ‘buy’ from ‘hold’ by Liberum Capital.

The broker believes the company is well placed to benefit from NewBuy, a government-backed scheme which offers both first-time buyers and existing home owners the chance to buy a new home by putting down just a 5 per cent deposit.

Oil exploration trio Premier Oil (LON:PMO), Cairn Energy (LON:CNE) and Nautical Petroleum (LON:NPE) were riding the crest of a wave today.

The companies’ shares soared today after announcing the jointly-owned Carnaby well made another oil discovery in the Catcher block in the North Sea.

Nautical has a 15 per cent stake in the block, which is operated by Premier (50 per cent). The other partners include Cairn’s newly acquired North Sea vehicle Agora Oil & Gas, which has a 15 per cent interest.

Brokers in the Square Mile were suitably bullish today following the find.

The discovery adds 23 pence or four per cent to Numis’ estimate of Nautical’s net asset value (NAV), bumping it up to 652 pence per share.

The broker also has a ‘buy’ rating on Premier, adding 13 pence to its NAV.

“We see a small risk of volumes being slightly lower than pre-drill estimates due to a shallower than expected oil water contact,” Numis analyst Sanjeev Bahl said.

“However, this may be offset by the excellent porosity (36 per cent) and oil saturation in the Tay.”

Oriel has a ‘buy’ stance on Premier and Nautical and an ‘add’ rating for Cairn.

There was further good news in the North Sea today for Providence Resources (LON:PVR).

The Irish company’s Barryroe well showed the light sweet waxy oil was of a better quality than first thought.

Daniel Stewart continues to view the stock “highly positively”, underlining its ‘buy’ recommendation and 1,344 pence target price.

The broker added that each well in Providence’s extensive drilling programme offshore Ireland presents an opportunity for a share price leap.

North America-focused oil and gas firm Magnolia Petroleum (LON:MAGP) was in demand after a number of positive write-ups in the press and tip-sheets over the long bank holiday weekend.

Notably, the popular Midas column in the Mail on Sunday tipped Magnolia as a ‘buy’ and said it should deliver strong growth over the next couple of years.

Another stock getting attention was Tertiary Minerals (LON:TYM) which was recommended by the Red Hot Penny Shares tipping service.

A note from the tipster claimed Chinese demand will leave the global market will short of fluorspar, a rare industrial metal that Tertiary is hoping to produce from its Storuman project in Sweden. The note recommended investors to ‘buy’ the stock up to the 15 pence level - currently priced at 5.75 pence.

HB Markets sees plenty of potential in Victoria Oil & Gas (LON:VOG) as it readies itself for first gas deliveries in Cameroon.

The broker’s ‘buy’ stance and 9 pence a share target price follows Friday’s news that the group is raising almost £4 million, which will give it financial flexibility ahead of becoming cashflow positive.

Merchant Securities expects Tower Resources’ (LON:TRP) share price to boom after Spanish oil giant Repsol announced plans to farm into the company’s Namibian licence.

“Although not yet finalised, if this farmout were to occur it would represent a turning point in the fortunes of the company as it would mean that an exploration well is likely to be drilled in the near term,” said analyst Brendan Long.

He also highlighted the importance of the news for Chariot Oil & Gas (LON:CHAR) as it brings another oil major into the country.

 

FTSE rises ahead of Easter weekend, JD Sport gains on upbeat outlook -...

The FTSE 100 gained on the final morning of this shortened Easter trading week. Festive cheer was limited though, as Thames Water confirmed shareholders would not provide it with a £500 million rescue package, prompting speculation over the London supplier’s future. On a more positive...

46 minutes ago