Following the successful SNE appraisal drilling campaign offshore Senegal this year, Cairn Energy PLC (LON:CNE) is taking stock of the extensive amounts of new data.
The results demonstrated unequivocally that SNE has the potential to be a major oil field, RBC Capital Markets noted, with reservoirs capable of delivering commercial flow rates.
“This drilling success provided a welcome exception to recent drilling disappointment across the sector; however, with limited news flow until drilling restarts in 2017, there is the potential for the stock to drift compared to leveraged peers, particularly in an improving oil price environment,” the broker said, as it downgraded the stock to ‘sector perform’ from ‘outperform’.
The price target is trimmed to 250p from 260p.
Building materials seller Wolseley PLC (LON:WOS) also gets the downgrade treatment, with JP Morgan Cazenove moving to a neutral position, bearing in mind the stock’s 10% outperformance in the year to date.
Despite the fact the stock was approaching what Cazenove viewed as fair value, it had been the broker’s expectation that the outperformance could continue, driven by an inflection in fiscal third quarter (Feb-April) like-for-like sales and positive US news flow.
Slower current growth reported last week prompted a rethink, and Caz has cut its current year earnings per share forecast by 2%.
“While the stock is off 8% in the last three days, we still only have 9% upside to our lowered price target. Given that we do not view the valuation as particularly compelling and we struggle to think of near-term positive catalysts, we are downgrading to Neutral from Overweight,” the broker announced.
Following a positive litigation ruling on Friday, things are looking brighter for Indivior PLC, the pharmaceuticals company spun out of Reckitt Benckiser back in 2014.
The ruling backed Indivior’s view that generic versions produced by Actavis and Par of the company’s Suboxone film infringe an Indivior patent that runs until 2024.
Deutsche Bank was not alone in assuming that generic versions of Suboxone film would hit the market in 2018, and it has updated its valuation model for the UK stock as a result.
The target price is hiked to 280p from 200p.
“In the near term we expect positive Ph III data for Indivior’s Suboxone film follow-on product, see the potential for a settlement with generic Suboxone film filers (rather than a drawn out appeal process) and expect the company to undertake M&A to diversify its pipeline away from Suboxone, a move which we believe would be taken well by investors,” the German bank revealed.
Deutsche is a buyer of the stock but Cantor Fitzgerald continues to sit on the fence, though it says the company is moving in the right direction.
“This outcome is a major positive for Indivior and reduces one of the key uncertainties over the investment case and is already assumed in our numbers. While the victory over Actavis and Par represents only one of many (there are four other generic protagonists), we believe that this outcome significantly strengthens Indivior’s position and should ultimately lead to settlement,” the broker said.
Aminex plc (LON:AEX), the operator of the Kiliwani North development licence in Tanzania has released what house broker Shore Capital Markets described as “a very encouraging update” on the prospect this morning.
Commissioning of the power generation and other auxiliary facilities has been completed and commissioning of the gas plant and sub-sea pipeline commenced at the start of this month, the broker noted.
On 2 June, the first gas was processed and entered the pipeline system connecting the Songo Songo plant with the national pipeline.
Aminex plans to conduct a well test during production build-up to determine the optimal flow rate for commercial production and, importantly, it is now expected that the well will be tested at closer to 30mln cubic feet per day (mmcfd), which is at the very top of the expected 25-30mmcfd range.
“So, with the KN-1 well performing very well and commissioning on schedule, we are highly encouraged by progress at Kiliwani North, which remains on track for commercial production shortly; our Risked NAV [net asset value] estimate stands at circa 4p/share,” the broker said.
Solo Oil PLC (LON:SOLO) also has an interest in the development. House broker Shore’s risked net asset value estimate for Solo stands at a penny a share.