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London broker comment corner; Ormonde Mining, Solomon Gold, Wentworth Resources, Xcite Energy
From London: Analysts at City heavyweight Goldman Sachs have tweaked their estimates upwards for the biopharmaceutical group Shire (LON:SHP) after it reported strong Q4 numbers, it emerged.
From London: Analysts at City heavyweight Goldman Sachs have tweaked their estimates upwards for the biopharmaceutical group Shire (LON:SHP) after it reported strong Q4 numbers, it emerged.
Goldman has repeated its conviction buy on the stock and has an unchanged price target of 2600 pence - representing upside potential of 19 per cent.
"We continue to view Shire as one of the best positioned companies in our coverage, said analyst Keyur Parekh.
The analyst added that in the near term, Goldman believed the consensus estimates under-valued the strong growth potential of the ADHD market in the US and, in the longer term, it believed the potential for Shire’s ADHD franchise in Europe remained significantly under-appreciated and could represent significant upside to Goldman's and consensus estimates.
Deutsche Bank has raised its target price for UK engine maker Rolls Royce (LON:RR.) but maintains its 'hold' rating after the group released full year results.
The results today showed revenues rising 4 per cent, while pre-tax profits were up 21 per cent to £1.16bn.
"Weaker than hoped for cash flow guidance and higher than expected R&D for 2012 were the key takeaways from results," said analyst Benjamin Fidler.
"This is now the second year in succession where cash flow outlook has disappointed.." he added.
The small increase in the target price was attributed to the lower pension deficit, he said.
Deutsche's new target price is 690 pence.
The German bank also released a note on banking giant Barclays (LON:BARC), rating the stock a 'buy' .
It said the bank reported full year 2011 pre-tax profit of £5.87 billion, 3/4 per cent below Deutsche's and consensus estimates but that
capital and cost performance and outlook were better than Deutsche had expected, helping address two key investor concerns.
In other coverage, Oriel Securities advised investors to ‘buy’ Valiant Petroleum (LON:VPP) ahead of the most operationally active year in the company’s history.
Valiant is planning to drill a total of five exploration and appraisal wells this year, which will also see the first oil from its Causeway field in the UK. The wells planned for 2012 will target net prospective resources of 30 million barrels of oil equivalent.
Despite the exciting year ahead, shares in Valiant are trading at a 40 percent discount to Oriel Securities analyst Nick Copeman’s net asset value (NAV) estimate of 675 pence per share compared to yesterday’s closing price of 434 pence.
“This (discount) looks unwarranted especially as the company has a very active E&A programme over the next six months,” commented Copeman.
Broker Numis has cut its rating for soft drinks group Britvic (LON: BVIC) to 'hold' from 'add' today. It targets a price of 380 pence for the shares (current price: 376 pence).
Analyst Charles Pick said the shares had performed well since the interim management statement of January 25, albeit, he said, off a very poor starting base.
There are no events scheduled before the annual investor seminar on March 28, said Pick, who also noted the recent warning comments from drinks giant PepsiCo on global input cost inflation.
"Britvic shares now look due at least a pause for breath on a short term basis," said analyst Pick in the note.
Turning to the junior mining sector, house broker Fairfax rates Ormonde Mining (LON:ORM) a 'buy' and targets a price of 21 pence.
"Ormonde is well positioned to deliver value on the tungsten project and offers good potential on its gold and copper prospects," it said.
The firm said the definitive feasibility study for the Barruecopardo tungsten project is expected by the end of February. It says the pivotal report is now substantially complete and it is now putting the final document together.
“(The DFS) will be a key milestone in the company's plans to become a major European producer of tungsten concentrates,” said managing director Kerr Anderson.
"The receipt of the final feasibility study should kick-start the last leg of the process to put Barruecopardo into production as the largest tungsten project in Europe,” said Job Langbroek, analyst at Dublin based broker Davy.
Elsewhere, Solomon Gold (LON:SOLG) expects to report a new inferred resource estimate for the Rannes project in Queensland towards the end of the first quarter 2012, it said in an update on the project.
The inferred resource stands at 812,000 ounces of gold equivalent comprising 486,935 ounces of gold and 13,014,294 ounces of silver.
Drilling since November 2011 has comprised 40 drill holes for 6,512 metres at the two main prospects, Crunchie and Kauffmans, and has continued to deliver strong intercepts, the firm said.
House broker Fairfax said in a note today: "We are encouraged by the assay results and look forward to the resource update at the end of Q1. The management team are well worth supporting in our view and we look forward to ongoing good news as the company makes further progress."
City firm Panmure Gordon said Wentworth Resources (LON:WRL) offers investors a good entry point into the rapidly developing East African gas markets of Tanzania and Mozambique.
“Wentworth has a discovered resource base, a producing field with growth potential as well as 3 shut-in wells, allowing it to serve rising local demand and, more importantly, new markets via the planned and funded pipeline to Dar-es-Salaam,” the broker said.
The company, which listed on AIM in October, has a 25.4 per cent stake in the Mnazi Bay licence, a joint venture between Maurel et Prom, Cove Energy (LON:COV) and the Tanzania Petroleum Development Corporation.
In Mozambique, Wentworth has an 11.59 per cent stake in the Onshore Rovuma Block and a 4.95 per cent royalty in the offshore prospect.
In other coverage, Kurdistan, East Africa and the North Sea are three key oil and gas regions that are likely to see significant positive momentum this year, according to broker Seymour Pierce.
Oil and gas analyst Dr Doug Youngson initiated coverage on eleven stocks and picked the three places as his ‘Top Regions’. At the same time he put a number of companies operating in these regions on his watchlist.
In Kurdistan, he picks out Gulf Keystone Petroleum (LON:GKP) and Heritage Oil & Gas (LON:HOIL).
Cove Energy (LON:COV) was Youngson’s pick in east Africa, while in the North Sea he prefers Faroe Petroleum (LON:FPM) and Xcite Energy (LON:XEL).
