Investors in BSkyB (LON:BSY) need to switch their focus back to the fundamentals of the company now that the NewsCorp merger looks increasingly unlikely to succeed in the near term, according to analysts at Royal Bank of Scotland.
The group’s shares have shed over 150p, about 18 percent, from 845 to 693p in the past week. But in a note to clients RBS repeated a ‘buy’ recommendation, but cut its price target from 900 to 830p as it removed the anticipated NewsCorp synergies from the valuation.
RBS analysts Paul Goode and William Mairs reckon Sky is well-placed to thrive despite the tough UK consumer environment.
Rio Tinto (LON:RIO) has already outperformed the UK 350 mining sector over the year to date but Citi reckons it can continue to motor ahead thanks to a continuing tight iron ore market. The company remains the broker’s most favoured UK metals and mining stock.
Citi analysts led by Heath Jansen point out that with iron ore set to contribute 60% of earnings over the next five years, the strength of that market will be critical in deciding the future of Rio Tinto’s share price.
While the consensus view is that there is a surplus looming for iron ore supply, Citi believes this may not occur for some time.
Evolution Securities analyst Louise Collinge repeated a ‘buy’ recommendation for Aureus Mining (LON:AUE) after the group revealed highly encouraging data from its New Liberty and Ndablama projects in Liberia this morning.
"Aureus Mining has delivered good drilling results from New Liberty and encouraging trenching results from Ndablama,” Collinge said. "In addition, the group is underway with lots of exploration work which we believe could demonstrate the potential for more gold within the Bea Mountain licence area in Liberia."
Fairfax Securities highlighted Hambledon Mining’s (LON:HMB) good gold drilling results in a note to clients. "The good news is that all drill holes intersected gold mineralisation and that drilling has expanded the known thickness of gold mineralisation by 150 percent,” the broker said.
"This should substantially improve the economics of mining and the value of the Sekisovskoye mine. We expect a new expanded gold reserve / resource and mine plan update in Q4 this year."
Davy analyst Caren Crowley had a positive view on Petroceltic International’s (LON:PCI) Algerian operations update today. "AT-6 has met the first of its objectives which was to prove up gas in the south-east of the Ain Tsila field. Recoverability of the discovered gas-in-place will soon be tested.
“The company's update also points to accelerated and significant news-flow in H2 which should act as a catalyst for the stock," she added.
Crowley, who rates the stock as ‘outperform’, said she was leaving valuations unchanged at 30.6 pence for the group, with a 20.6 pence for the Algerian play, until flow data from the AT-5 well was received.
Dougie Youngson, oil analyst at Arbuthnot, reckons Faroe Petroleum’s (LON:FPM) Petoro asset swap is worth an extra 9p a share.
The analyst repeated a ‘buy’ recommendation for the shares and upped his price target from 265 to 274p, after the group gave an update on the transaction today. Youngson said that Arbuthnot's model provided for an additional 3 pence for the increased production and 6 pence for the uplift in reserves at Njord.
"We feel today's news further highlights the positive impact the Petoro transaction has had on Faroe's operations,by contributing higher production rates and additional reserves," Youngson added.
Shore Capital analyst Craig Howie said that Solo Oil’s (LON:SOLO) well completion, at the Ausable Reef in Canada, is very positive news. “The partners had already appeared confident in their ability to bring Ausable-5 online as a commercial producer, and today's update basically confirms that this will be the case,” the analyst said.
“We look forward to a definitive result from flow testing in coming weeks.”
Helius Energy (LON:HEGY) now has a much trimmer management structure and it can make quicker decisions after today’s restructuring, according to analysts at Northland Capital.
“For a small company with a lean structure it had a top heavy board structure with unnecessary costs and the announced board changes address this issue,” said the broker. “The management now need to realise the value in its portfolio for its shareholders,” Northland added.
Northland has a ‘buy’ recommendation for Helius, with a 54 pence target.
The City responded positively to this morning’s announcement by machine-to-machine communications company Telit Communications (LON:TCM) that it expects to report a 36 percent uplift in its first half revenues.
The firm, which reports its results for the six months to 30 June 2011 in September, said its board was confident that trading is in line with expectations for the year as a whole. Telit expects H1 revenues to come in at US$81 million, a 36 percent improvement compared with US$59.6 million for H1 2010. Net cash for 30 June is expected to come in at US$2.4 million.
Investec Securities commented that today’s guidance from Telit was “in line with our expectations and is a solid result during the Motorola integration period”.
Investec, Telit’s house broker, is forecasting total revenues for the year of US$200 million (2010: US$131.7 million), with normalised pre-tax profits expected at US$15.3 million (2010: US$6.4 million). The bank is expecting earnings per share to come in at around 10.1 US cents (2010: 5.4 cents).
For next year, Investec expects revenues of US$237.4 million, with pre-tax profits of US$23.3 million and EPS of 13.9 cents.
"At 10.8 times our [financial year 2012] EPS we continue to see the underlying growth in the business as materially undervalued and reiterate our ‘buy’ recommendation and [price-to-earnings ratio] based target price of 120 pence," it added.
Independent broker Northland Capital Partners said that the update showed a good start to 2011, with trading plus January’s placing (of around 24 million shares to raise £19 million) enabling the business to move to a net cash position.
“Stripping the Motorola contribution out implies an organic growth rate of 8.7 percent,” said Northland. “This would appear light against recent performance and market growth but [H1 2010] was a bounced period. We maintain our ‘buy’ rating and 125 pence price target.”