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Investors turned down the gas on Centrica after UBS downgrade

Published: 12:55 18 Feb 2014 GMT

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Investors turned down the gas on Centrica (LON:CNA), which fell 3% in morning trade after UBS downgraded the stock to ‘sell’.

Distilled down to the bare bones, UBS reckons the British Gas owner faces risks from both sides of the political divide with Labour and coalition vying to scapegoat the gas and electricity firms.

The shares were off 10.27p and changing hands for 308.3p. UBS reckons they are worth 280p each, where its target price was 340p previously. 

Sticking with the power theme, but moving to India: Shore Capital reckons AIM-listed OPG Power Ventures (LON:OPG) has reached the inflection point in its development.

The City firm repeated its ‘buy’ rating following the company’s third quarter update.

In it, OPG revealed its two latest electricity plants are on time and on budget, adding that its full-year results look set to meet the City’s forecasts.

Analyst Robin Speakman said the update confirmed OPG’s development is going to plan, while the underlying business performance is around 20% ahead of his initial expectations.

He points out that revenues are set to rise from March 2013 to March 2016 by 5.6 times, with adjusted pre-tax profits multiplying by 6.6.

“Management has delivered on all OPG’s stated strategic objectives. The mature valuation for the company is now coming into focus based on high visibility,” Speakman said.

“We point investors towards OPG’s high returns on capital (return on equity rising to 50% in FY2016F) and reducing valuation risk in cash flow analysis.”

Investors listened to the ‘buy’ advice, sending the share price up 4% to 81.8p.

Making the short trip along the Central Line from Shore’s offices in Mayfair to UBS’s base in Liverpool Street, we’re told analysts at the Swiss bank have opened coverage of software specialist WANdisco (LON:WAND). 

They expect to see a bigger contribution from its Hadoop Big Data business this year, as the stock was initiated with a ‘buy’ rating.

Shares in the group jumped 170% last year, making it one of Europe's top-performing stocks, mainly on the back of developments in Big Data.

“As data volumes explode, Hadoop's low-cost, scaleable architecture makes it well placed to capitalise on this, and take share from traditional database and storage technologies.”

Hadoop currently has a 1% share of the US$44bn Big Data market.

UBS calculated a Big Data valuation for WANdisco of 728-1639p, assuming Hadoop takes a quarter of future data growth, valuing the entire company at 1525p, UBS said.

The shares were up 2.8% at 1,310p on Tuesday.

The price of platinum is not yet accounting for a lengthy strike in South Africa.

So say the number crunchers at Deutsche Bank, who suggest the prices of the group of precious metals could rise if the strike continues much longer, leading to some “tightness” in the market once supplies dry up.

Deutsche tipster Grant Sporre says producers have about eight weeks of stocks piled up.

Deutsche estimates the strike has paralysed around 50% of Amplats and Impala’s mining output and all of Lonmin’s (LON:LMI) output, making it more severe than previous demonstrations.

However, the price is only up 5% since the start of the year – a relatively muted reaction compared with previous standoffs, including the violent strikes seen in 2012.

The broker likes the look of Amplats (LON:AAL), Lonmin and Aquarius Platinum (LON:AQP) in the event that prices indeed rise.

Shares in DekelOil (LON:DKL) rose 15% 1.5p after it said commercial production from its 60 tonne an hour capacity crude palm oil (CPO) extraction mill in the Ivory Coast started ahead of schedule on February 11.

Broker Optiva believes they have further to go as analyst Graeme Dickson this morning reiterated his 2.04p a share price target and ‘buy’ recommendation.

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