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 2: Providence Resources, ZincOx Resources, Plethora Solutions, Gulf Keystone Petroleum and Solo Oil
While they admit there are risks to the share price, including concerns over the Premier League rights renewal and costs, slowing subscriber growth and a “more competitive UK landscape”, analysts at the US bank reckon the rewards heavily outweigh the “minimal” risks.
“We think risk/reward tilts positively,” they said.
The broker has a target price of 750 pence against a current market price of 680 pence, up 1.87 per cent in early trading.
Although rocked by poor results and the departure of CEO David Brennan announced last week, the banking heavyweight reckons things will get better from here.
They have however dropped their target price by 250 pence to 2,800 pence following a 6 per cent drop in share price since the results.
Analysts at the firm have reiterated their ‘buy’ stance and upgraded the target price to 325 pence from 300 pence.
They think consensus is too bearish on 2012 impairments and asset quality could prove “more robust than expected”.
“While the second quarter may prove more challenging following the re-emergence of sovereign concerns, we believe Barclays is well-positioned to benefit from the wider withdrawal of FICC (Fixed Income, Currencies and Commodities) competition in the medium-to-long term,” they said.
The share price was down slightly this morning at 221.11 pence.
Despite what would seem to be an improving political situation in Mali, analyst Tyler Broda reckons there is more value and less unpriced political risk in other stocks, and has downgraded the company to ‘reduce’ from ‘neutral’.
Shares in the company were down almost 100 pence in early trading at 5,518.60 pence.
The broker argued the company’s version of UK recruitment process outsourcing (RPO) was an “unusual staffing business model” and the main driver of weak profits.
He reckons the positive results at the well offshore Ireland are a validation of the company’s strategy.
“There is also plenty to keep interest into next year too with very large targets being drilled along the Atlantic margin (Dunquin and Spanish Point),” said Langbroek, who has an ‘outperform’ rating on the stock with a target price of 1,000 pence.
Shares in the company stood at 552 pence today, down 11.50 pence.
It’s all systems go at ZincOx Resources (LON:ZOX) as the group announced its Korean zinc recycling plant KRP1 achieved its first hot test operation and production of zinc oxide concentrate and iron oxide.
FinnCap analyst David Buxton said the “very significant” announcement was proof that the process is valid and has been scaled up successfully to industrial volumes, hitting the targeted zinc and iron yields.
He also commented on the importance of the start-up permit received from the Korean Ministry for the Environment, which now means regular deliveries of electric arc furnace dust (EAFD) can be made. Buxton has a target price of 185 pence.
The broker has a new price target of 15.7 pence, an increase of 3.5 pence from the previous mark and a huge premium of more than 200 per cent to the current price of 5.14 pence.
The broker added that the company’s lead development product, the PSD502 treatment for premature ejaculation, could go mass market, comparing it to erectile dysfunction treatment Viagra.
Shares in Kurdistan-focused Gulf Keystone Petroleum (LON:GKP) rose 10 pence today to 237 pence on the back of the news that its Shaikan-6 well struck oil even deeper than expected.
“Today’s announcement has provided some good clarification of the status of its operations in Kurdistan,” Seymour Pierce analyst Dougie Youngson said in a note to clients.
Youngson repeated a ‘buy’ recommendation on the stock, targeting 524 pence a share.
Together with operator Aminex (LON:AEX), it plans further studies to establish the extent of the discovery, while it intends to invite offers from potential farm-in partners for the next round of exploration activity, according to Old Park Lane Capital.
Analyst Barney Gray said: “With strong indications that Solo’s acreage is increasingly prospective towards the offshore region of the basin, we await news of the next round of exploration activity with great interest.”
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