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Brokers: 25% upside as well as big yield at Imperial Brands

A round-up of some of today's broker commentary

picture of Imperial boss Alison Cooper
Imperial boss Alison Cooper

Imperial Brands (LON:IMB) has fared poorly in the anti-staple 'Trumpflation' rally but Deutsche Bank reckons this is about to change.

Setting a bottom of 3,350p for the tobacco group, the broker believes  consolidation has returned to the tobacco sector.

Dividends of 8% will be received within 16 months and the shares are worth 4,350p in Deutsche’s view.

The current valuation of drug discovery firm ImmuPharma PLC (LON:IMM) is well below where it deserves to be, according to an analyst at Northland Capital.

Vadim Alexandre has the stock as a ‘buy’ and has high expectations for the company, setting a price target of 137p – more than a quid higher than what the stock currently trades at.

“You’ve got a potential blockbuster drug [in Lupuzor], this [current] valuation is way too low for that programme on its own, and that says nothing about the oncology programme [either],” Alexandre tells Proactive.

Broker Numis has upgraded Mexico-based silver giant Fresnillo (LON:FRES) to 'hold' on valuation grounds.

While the incoming Trump administration's actual policy stance towards Mexico remains unclear, 67% of its costs are Peso-based and so the group would be a clear beneficiary of a weaker currency, notes analyst Jonathan Guy.

As the iron ore price posted its sharpest fall in five years, albeit after an almighty upward run, a heavyweight London broker has tipped the metaphorical bucket of cold water over the prospects for mining stocks.

JP Morgan Cazenove believes investors are probably over-estimating the potential impact of a Trump presidency on the sector and not really assessing the risks.

As a result, the rally in industrial metals values seen over the last week is probably out of touch with reality, it added.

JPM’s picks are picks are Anglo American PLC (LON:AAL) and Rio Tinto PLC (LON:RIO), which are rated 'overweight'.

BHP Billiton plc (LON:BLT) and Antofagasta PLC (LON:ANTO) are seen as vulnerable to a commodities market correction.

Whether or not all of Next Plc’s (LON:NXT) problem come down to weather UBS analyst Andrew Hughes reckons it will be the biggest short-term influence on sales.

Another risk is competition, particularly from Associated British Food Plc (LON:ABF) Primark.

“The main risk is whether Primark destabilises the low end of the market to the degree that the mid market will be unable to make price increases stick,” the analyst said.

Shell PLC (LON:RDSB) may be sitting on an undiscovered jewel with its onshore acreage in the US according to analysts at Deutsche Bank.

The German broker notes that prospects in the US Permian Basin are now changing hands for up to US$45 per acre, which puts a value of US$10bn on its 2bn barrel Delaware position.

Buy is Deutsche’s view with a 2,220p price target. Shares today were 2,068p.

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