Analysts at Jefferies International have initiated coverage of recently floated North Sea oil and gas producer Ithaca Energy PLC with a 'Buy' rating and a 245p price target.
In the analysts' view, the target price represents around 38% upside for a company carrying the "highest Pro Forma 2P reserves life among North Sea peers but which is now trading at almost 20% dividend yield (2023/24e) post-IPO on increased UK oil & gas taxation".
They concluded that: "Additional tax hit is an unavoidable impact to all UK producers but Ithaca's consistent, coherent strategy focused on growth and returns is a compelling proposition."
Ithaca Energy shares started trading in London on November 14, 2022, following an IPO priced at 250p per share, the bottom-end of the expected range, valuing the company at £2.5bn.
The company was bought by Israeli group Dekel in 2017 for US$646mln but has subsequently bulked up considerably with other North Sea deals.
In late afternoon trade on Tuesday, shares in Ithaca Energy were changing hands for 182.50p, up 2.5% on Monday's close.