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Broker Round-up Part 2 including Anglo Asian Mining, Hambledon Mining, Range Resources, Solo Oil and Lansdowne Oil and Gas
US broker Morgan Stanley predicts more pressure will build on Nokia and today slashed its price target from €3.80 to €2.60 and reiterated its ‘underweight’ rating on the stock.
The Finnish mobile phone handset maker dominated today's headlines for all the wrong reasons after a loss warning and revelation that a software bug has hit its new flagship smartphone.
The Lumia 900 can occasionally lose its data connection and Nokia has been forced to offer affected customers $100 (£63) in call credit. It was also revealed that the phone costs $209 to build, some 46 per cent of its retail price.
Nokia also blamed strong competition for smartphone sales. Apple and Samsung currently dominate the market and Nokia has struggled to compete since the launch of the first smartphones, despite still being the world’s biggest volume maker of mobile phones.
Morgan Stanley remains “cautious” longer term on Nokia’s cost structure and competitive threats. Nokia’s ADR share price closed on $4.24, down 15.7 per cent.
Meanwhile, supermarket giant Tesco’s (LON:TSCO) like-for-like sales should improve post-Christmas, according to Japanese financial firm Nomura.
Tesco has been under pressure in 2012 after suffering a disappointing Christmas trading period, while its share of the UK grocery market has dipped below 30 per cent for the first time in seven years.
The market leader is to release its preliminary results on 18 April and Nomura expects better fourth quarter sales.
Like-for-like sales excluding VAT and fuel in the six weeks to 7 January fell by 2.3 per cent but Nomura predicts fourth quarter and annual like-for-likes will fall by 1.7 per cent and 0.9 per cent respectively.
Nomura believes early signs of improvement will be “viewed positively” by investors, even though increased couponing and promotional activity is partly responsible for this.
The firm maintains its ‘buy’ recommendation and target price of 430 pence per share for Tesco.
In energy, broker Liberum has raised its recommendation for oil and gas group BG Group (LON:BG) from ‘hold’ to ‘buy’ and retained its price target of 1,721 pence per share.
In 2011, it increased 2P reserves by 7 per cent to 7,187 mmboe, which was over thirty times the previous year’s production.
Liberum said: “BG continues to deliver higher reserves replacement at lower unit cost than almost all peers.”
This performance confirmed the broker’s assumption that future Finding and Development (F&D) costs will remains about US$12.5/boe.
Recruitment specialist Michael Page (LON:MPI) was upgraded to ‘overweight’ from ‘neutral’ by city firm HSBC, while its target price remains unchanged.
Page’s first quarter trading update was in line with estimates said HSBC, but its stance has become more bullish after the recent share price de-rating.
Premier Oil (LON:PMO) has also been upgraded by HSBC from ‘neutral’ to ‘overweight’, as the share price decline of around 10 per cent provides a good point of entry for investors.
HSBC has a target price of 445 pence per share for the North Sea producer, which also has interests in Middle East, Africa and Pakistan. The current market price is 389 pence.
Central Asia-focused mining company Anglo Asian Mining’s (LON:AAZ) stock is rated as ‘buy’ by City firm Fairfax, which gives a target price of 72 pence per share against the current market price of 35 pence.
Due to severe weather conditions at the Gedabek gold/copper this winter, Anglo Asian Mining announced worse-than-expected results for Q1, as the leaching of gold heaps stalled.
However, Fairfax expects the output to pick up and a recently expanded resource base should increase the life of the project and justify the construction of the agitation leaching plant.
The broker said: “We believe the drop in the output in Q1 should be balanced by increased production in the following quarters as leach rates return to normal.
“Either way, production and sales should grow from 2013,” concluded Fairfax.
The broker also released a note about Kazakhstan-focused Hambledon Mining (LON:HMB), which announced yesterday it received $3 million in funds from the European Bank for Reconstruction and Development (EBRD).
Fairfax remained optimistic on the company’s outlook, especially relating to the successful transition to underground mining at Sekisovskoye, but maintains that the company now needs hard evidence if it is to capitalise on this value.
“Management will now have to demonstrate results in their programme to move to underground mining and to achieve timelines that they have set out.”
AIM-listed oil explorer Range Resources (ASX:RRS) was rated a ‘buy’ by broker Old Park Lane after news on drilling in Somalia and Trinidad.
Range’s drilling programme in Trinidad “will gather momentum over the next six months”, says the broker.
A fourth rig is set to enter the fray, while two further medium-depth rigs are expected to be up and running by July.
Old Park Lane also rates Solo Oil’s (LON:SOLO) stock a ‘buy’, and says that Solo, in tandem with operator Reef Resources (CVE:REE), is “making good progress in Ontario”, regarding the Enhanced Oil Recovery (EOR) project currently underway in Canada.
Irish oil group Lansdowne Oil & Gas’ (LON:LOGP) target price has been trimmed by broker finnCap to 65 pence this morning after mixed 3D seismic results at the Rosscarbery licence area.
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