Shares in Bankers Petroleum Ltd (TSE:BNK, LON:BNK) shot up by two-thirds in Toronto on the back of the agreed bid from Geo-Jade.
With the shares trading at C$1.80, the stock is still some way short of the C$2.20 a share cash offer from Geo-Jade, and the recommendation from Dundee Capital Markets is to sell into strength.
It has upped its price target from C$1.20 to C$2.20 and switched to a 'sell' rating from 'neutral'.
“We believe this sale agreement represents an excellent deal for Bankers' shareholders, near-double the current market valuation - albeit the trading level observed just four months ago - thus crystallizing a significant return to shareholders, unavailable near-term on an independent, stand-alone basis,” the Dundee analysts said.
“However, despite the definitive sales agreement with Geo-Jade, and unanimous support of Bankers' board of directors and senior management team, there remain a variety of potential risks, regulatory and other, to the consummation of this deal, expected to close mid-2016. We also do not expect other serious rival bids to emerge, given the ongoing tax dispute and future fiscal renegotiations,” the analysts added.
Over in the sporting company, broker Jefferies expects solid results when sportswear maker Nike Inc (LON:NIKE) reports fiscal third quarter results after the close of trading on Tuesday.
“Athletic footwear has been a bright spot in an earnings season shaken by warm weather, and the positive read-throughs we got from other companies that have reported bode especially well for Nike, in our view,” the broker said.
It sees growth supported by newly announced innovations, which by its initial estimates could drive a $2.5-3.0bn revenue tailwind or greater over the next four to five years.
Jefferies is forecasting third quarter earnings per share (EPS) of 47 cents on the back of 11% sales growth.
“Based on our store and online checks, we believe the LunarEpic Flyknit is off to a very strong start, with sell-outs in some markets and out-of-stocks in some sizes/colorways online. We think demand will only increase going forward, as the shoe is in limited supply right now,” Jefferies said, as it reiterated its 'buy' recommendation and $76 price target.
Nike shares currently trade at around $64.66.
Sticking with the sporting theme, the exit of football club Manchester United PLC (NYSE:MANU) from European football this season at the hands of bitter rival Liverpool will cause emotional pain to fans but will have little financial impact, according to Nomura Securities.
It has reduced its match-day revenue estimate for fiscal 2016 by just £1mln – barely enough to cover the annual salary of a fringe squad player – to reflect the fact that the club has been eliminated from the Europa League, the lesser of the two pan-European football tournaments.
On the plus side, the club should earn some more television revenue from its Football Association (FA) Cup replay with West Ham United, which will help offset the loss of gate money from European football.
A revival of the club's fortunes in the domestic league, where despite spending a fortune on players it was underperforming until it turn to players from its youth academy, means that qualification for the European Champions League (an inaccurately named tournament that is open to the champions and various runners-up in Europe's domestic leagues) next season is now looking more likely, especially after a victory over local rivals Manchester City, who are currently blocking Manchester United's access to the European Champion's League.
“Missing out on Champions League for fiscal FY17 results would affect EBITDA by £5mln-6mln owing to being able to offset lower revenues with lower wages and bonuses, as long as the team was in the Europa League. However, the ability to attract world-class players would be affected. We estimate net player capex of £110mln in FY17 and £86mln in FY18,” the broker said, as it maintained its neutral rating on the much loved/much hated football club.
Moving on to another area of the entertainment business – although “entertainment” has been in short supply at the Old Trafford football ground this season according to many Manchester United supporters - upcoming price increases for certain Netflix customers will likely drive churn, presenting Amazon with an opportunity, according to stockbroker Wedbush.
Netflix increased its core domestic price by $1 in October to $9.99 for new members.
“Existing members on its $8.99 core plan will see the $1 price increase after one year, while grandfathered members still on the $7.99 core plan will likely see a $2 increase on May 9, 2016. We think the May 9 price increase will impact over 30 million customers. We expect this to drive 1% additional churn, notwithstanding the company's commentary in its most recent investor letter that it does not expect significant churn due to the price increase,” Wedbush calculated.
“We expect to see slowing domestic subscriber growth for Netflix in the middle two quarters of the year, and expect Amazon to benefit from this churn,” it concluded.
Convalo Health International Corp (CVE:CXV) continues to be an undervalued play on demand growth for substance abuse treatment in the US, according to Mackie Research Capital.
Having given a new investor presentation from Convalo the once-over, Mackie said it does not plan to make material changes to its estimates, as it reiterated its 'buy' recommendation and 90 cent 12-month target price.
“CXV is working towards an exit revenue run rate of $80 million, which assumes the development and ramp-up of five pods. Each pod includes a detox facility, an intensive outpatient centre and lab capacity/support. The CAPEX required to develop a de novo pod is very modest (approx. $1 million), so the company has ample balance sheet capacity to finance its plan internally,” Mackie said.