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Peel Hunt spotlights 29 stocks with potential to double on 2-3 year view including Base Resources, Eland O&G, Motif Bio, Circassia

The City broker’s analysts pointed out that December is often a time for winding down and celebrating but with the FTSE All Share looking set to record its worst annual performance since 2008 the festive spirit is a little short this year
Shares boost
They added: “While it is still difficult to call what will happen with Brexit and how this will impact the market, there are always some stocks that are dancing to their own particular tune which could deliver some healthy returns"

Analysts at Peel Hunt have compiled a list of 29 stocks which they deem to have the potential to double on a 2-3 year view including AIM-listed Base Resources PLC (LON:BSE), Eland Oil & Gas PLC (LON:ELA), Motif Bio Plc (LON:MTFB), and FTSE Small Cap Circassia Pharmaceuticals PLC (LON:CIR).

In a note to clients, the City broker’s team pointed out that December is often a time for winding down and celebrating but, with the FTSE All Share looking set to record its worst annual performance since 2008 - when it dropped by a third in value - the festive spirit is a little short this year.

READ: Base Resources' Kwale mine 'attractive' and generating significant cash flow, says broker

The analysts said: “While it is still difficult to call what will happen with Brexit and how this will impact the market, there are always some stocks that are dancing to their own particular tune which could deliver some healthy returns.” 

For miner Base Resources, on which they have a 31p target price, Peel Hunt said they see two value catalysts - Kwale exploration, which looks likely to add to the mine life, extending the overlap with Toliara; while the Toliara development gives the company a long life asset.

They pointed out that extending the overlap with Toliara would speed project debt reduction, de-risking the group significantly while an increasing amount of the 21p value they see in that project should also come into the share price.

Ongoing development drilling for Eland

Reiterating a 160p price target on Eland Oil & Gas, the Peel Hunt analysts said that the low-cost nature of the group’s production assets means it achieves very healthy netbacks.

They pointed out: “As we move beyond the current volatility and oil prices trend upwards over the coming years, in combination with clear visibility on further material production growth, Eland is ideally positioned to exploit the full potential of OML 40.

“We expect ongoing development drilling to continue yielding positive results and with the low-risk, 78MMbbl Amobe prospect due to spud in 2019, a very high chance of success opportunity exists to double the resource base.”

Iclaprim US date key for Motif Bio

Meanwhile, for Motif Bio, on which they have a 95p target price, the analysts said the upcoming date for potential approval by US regulators of the firm’s iclaprim antibiotic of 13 February 2019 could result in a material rerating of the stock.

They said: “We remain convinced of iclaprim’s efficacy at a time of high unmet need as antibiotic resistance rises. Iclaprim also has a very favourable safety profile, established across three phase-3 trials (c1,300 patients dosed), and a potential market of c3m patients per year in the US alone.

The analysts added: “Recent US stewardship guidelines for antibiotic use by the Infectious Disease Society of America (ISDA) and favourable economic work-up on the reduced care-pathway costs of using iclaprim vs the standard of care, provide a strong differentiator for iclaprim’s use.”

Circassia reinvented 

For Circassia, the Peel Hunt analysts noted that the firm has reinvented itself as a specialist respiratory pharma play having discontinued its allergy activities.

They added: “Progress has been swift, with a significant deal with AstraZeneca that brought US rights to two COPD products with combined peak sales potential of c$300mln.”

The analysts concluded that Circassia’s delivery on sales and cash at its half-year and strong operating leverage underpins their 120p target price for the stock, implying a near doubling of the share price.

Rest of the list

The other 25 stocks on the Peel Hunt list are Nanoco PLC (LON:NANO), CMC Markets Plc (LON:CMCX), On the Beach Group PLC (LON:OTB), Polar Capital Holdings plc (LON:POLR), GB Group PLC (LON:GBG), PureTech Health PLC (LON:PRTC), GoCompare.com Group PLC (LON:GOCO),  Gulf Keystone PLC (LON:GKP), Renold plc (LON:RNO), Joules Group PLC (LON:JOUL), RHI Magnesita NV (LON:RHIM), JD Sports Fashion PLC (LON:JD.), Rockhopper Exploration Plc (LON:RKP), Kaz Minerals PLC (LON:KAZ), SIG PLC (LON:SHI), Kenmare Resources PLC (LON:KMR), Sumo Group PLC (LON:SUMO), Kin and Carta PLC (LONLKCT), Ten Entertainment Group PLC (LON:TEG), Lookers PLC (LON:LOOK), The AA PLC (LON:AA.), Manx Telecom PLC (LON:MANX), The Gym Group Plc (LON:GYM), and McCarthy & Stone PLC (LON:MCTY).

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