“In current market conditions with commodity prices having collapsed, we believe it would be sensible for Anglo American to cut its dividend at the next interim results.
“The company’s credit rating is one notch away from junk status, and a downgrade could lift debt service costs materially. At current commodity prices, management has little choice but to focus on balance sheet preservation in order to navigate a sustained downturn.”
“In particular, we would point to the ‘flat’ net debt profile,” analyst Gerry Hennigan said.
He adds that Premier Oil is “defensively positioned” in the near term plus there is the prospect of significant production growth as the Solan field comes on stream.
Yesterday’s post-budget sell off in UK house builders was overdone, says investment bank UBS.
Analyst Gregor Kuglitsch does, however, acknowledge that ‘disappointingly’ it was the first negative budget for the housing sector for some time, and says Berkeley Group (LON:BKG) will likely be worst hit by changes to the proposed reduction in buy-to-let related tax breaks.
Kuglitsch, in a note, points out that Berkeley is more exposed to the changes than its peers with around half of its properties sold to investors rather than residential buyers.
As one might also expect property in the capital will be most affected too.
“In our view, those with London exposures are likely to feel the highest impact on demand/house prices given the greater proportion of investor sales in the capital,” Kuglitsch said.
The analyst does also point out that the tax breaks aren’t relevant for cash buyers or foreign investors.
Liberum Capital, meanwhile, upgraded online clothes retailer Asos (LON:ASC) to ‘hold’ from ‘sell’.
Smith & Nephew (LON:SN.) is upgraded to ‘buy’ from ‘hold’ by Berenberg, which says its now the right time to pick up shares in the replacement hip maker because a recent pullback has created “an attractive entry point”.
The same sentiment was repeated by Goldman Sachs in regards to Prudential (LON:PRU) which has been added to the American bank’s ‘conviction buy’ list following the share’s recent underperformance; the lower price means more upside, so the theory goes.
“In our view Prudential’s recent underperformance offers an attractive entry point into one of the best positioned compounding businesses in our European coverage universe,” said Goldman analyst William Elderkin.
Goldman’s price target of 1845p represents more than 20% upside to today’s price for Pru.