Broker Spotlight brings some of the more intriguing and topical analyst coverage to centre-stage. The daily column aims to illuminate thoughts and opinions behind the big stories. London is one of the financial capitals of world. The influential and closely followed views of its analysts regularly move markets and split opinion. The Broker Spotlight column arms Proactive readers with the added insight from the often colourful thoughts and headline-grabbing valuations from the City’s analyst community.
Broker Round-up Part 1: Afren, Prudential, IMI, Fresnillo, BHP Billiton,
Oil and gas company Afren (LON:AFR) continued to blaze a trail in the energy market today in light of the significant Kurdistan oil discovery announced yesterday.
Shares have jumped this week as a result and continue to rise today, up 1.26 per cent this morning to 145.10 pence.
UBS upped its target price by 10 pence to 160 pence and maintained its ‘buy’ rating following the oil discovery on the Simrit-2 well (Ain Sifni), which is positive news for the rest of the block.
The broker said: “We think this success at a number of reservoir levels on Simrit-2 has important positive implications for prospectivity on the remainder of the Ain Sifni block, where Afren has other potential targets.”
UBS had more good news on the insurance front as it raised its price target to 875 pence from 800 pence for international financial group Prudential (LON:PRU).
It also kept its ‘buy’ stance and is trading in line with UK peers, which is unusual given its Asian exposure, said to the broker.
It added its Asian division Prudential Corporation Asia (PCA) is a far more attractive proposition than life insurance rival AIA for structural reasons.
Engineering group IMI’s (LON:IMI) share price jumped 2.87 per cent today to 987 pence after broker Jefferies upgraded the company to a ‘buy’ from ‘hold’.
In addition, the target price rocketed 310 pence to 1,150 pence.
UK-based IMI has limited potential for growth but is a high returns business, according to Jefferies.
The broker said: “We believe IMI is a quality business, with high returns and a healthy balance sheet.”
Headlining the broker coverage this morning was precious metals giant Fresnillo (LON:FRES) following a mixed bag of results yesterday.
The world’s largest silver company boosted its status as a significant gold business, producing 121,792 ounces of gold for the three months ended 31 March, which is an increase of 26 per cent on last year’s take. Silver production however dipped slightly below forecasts but the company maintains it is still on track to hit its annual targets.
As a result, JP Morgan Cazenove downgraded its target price for the Mexico-based firm to 1,900 pence from 1,970 pence on the back of lower earnings estimates, but said that solid growth could spark a gold rush in the next few years as Fresnillo looks to steal in on the gold market.
Shares in the company crept up 0.92 per cent this morning, trading at 1,639 pence.
BHP Billiton (LON:BLT), the world’s largest natural resources company, gave the mining sector a further boost as it flexed its muscles in the market this morning.
Shares rose 1.47 per cent to stand at 1,971.50 pence in early trading following the Anglo-Australian company’s positive quarterly results yesterday.
Swiss bank UBS maintained its ‘buy’ recommendation and 2,400 pence target price on the stock today after it achieved record production levels of iron ore for the nine months ended 31 March, up 22 per cent. Its onshore US petroleum business is also on fire after delivering a 35 per cent increase in liquids production.
Heavy rainfall in Australia failed to dampen the company’s spirits despite slowing iron ore and coal production.
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