Palm oil producers listed in London are under-priced, according to broker VSA Capital.
Share prices for MP Evans (LON:MPE), Dekel Oil (LON:DKL) and others have fallen out of step with a rally in the underlying value of the commoditised food ingredient since it found a ‘bottom’ in August, it explained.
The broker points out that the European crude palm oil benchmark price is up 22% since August 26, while in the same period the Malaysian price gained 27%.
VSA analyst Edward Hugo, in a note, said: “Across the 66 palm oil producers that I follow there has been an average share price increase of 8.4% since CIF Rotterdam CPO hit a bottom on 26/08/15 (US$490/t).
“London listed producers have certainly lagged their foreign-listed peers, suggesting this could present a buying opportunity.”
There was, meanwhile, focus on producers of crude oil - the non-edible, hydrocarbon variety.
Tullow Oil (LON:TLW) was upgraded by JP Morgan Cazenove to ‘overweight’, though a revised price target was set at 310p from 380p.
JP at the same time downgraded targets for Cairn Energy (LON:CNE), EnQuest (LON:ENQ), Ophir Energy (LON:OPHIR) and Genel (LON:GENL) as it says the oil market is adjusting to a ‘lower for longer’ view.
Nevertheless, analyst James Thompson said: “Short term, the oil price appears again to have found a floor which sets the tone for a recovery.”
Both JP and UBS downgraded SOCO International (LON:SIA) – with the latter cutting its rating to ‘sell’ from ‘neutral’ while the former reducing the price target (as above).
Goldman Sachs has upgraded its rating for fellow bank Standard Chartered (LON:STAN) which is now seen as a ‘buy’.
Marks & Spencer (LON:MKS) has been downgraded by Peel Hunt to ‘sell’ from ‘hold’.