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London broker comment corner; Citi downgrades Schroders, HSBC underweight on BSkyB

Saturday, February 18, 2012

London broker comment corner; Citi downgrades Schroders, HSBC underweight on BSkyB

Proactive Investors brings you the buzz from the brokers, with a wrap of overnight comment from some of the biggest names in the London square mile.

From London: Wall Street bank Citi has downgraded asset managers Schroders Plc (LON:SDR) to 'sell' from 'neutral' today.

Analyst Haley A Tam pointed out that Citi believed the firm's share price had responded too quickly and too positively to the market rally and the early signs of fund flow recovery.

The analyst has upped the price target to 1370 pence from 1310 pence to reflect the recent market rally but downgraded the stock to 'sell'.

In mining, Citi has also downgraded African Barrick Gold today (LON:ABGL) to 'sell' from 'buy' with a target price of 419 pence - reduced from 655 pence previously.

Analyst Jon H Bergtheil said the company had had a tough 2011 when state power outages caused a loss of 40,000 ounces, but with various factors, it was realistic to expect a much better year in 2012.

"However, ABG has guided to little-changed production and is guiding to even higher cash costs of up to $810/oz in 2012 from $692 in 2011," said the analyst.

"As a result of the poor 2012 guidance and also our re-alignment of timing and capex of development projects, we have reduced our estimates and cut our NPV (net present value) from £5.04 to £3.49," he said.

In other broker coverage, HSBC has reiterated its 'underweight' rating and 550 pence price target (current price: 686.5 pence) for broadcasting and communications firm BSkyB (LON:BSY) which said that the threat to the firm's internet TV service was accelerated by high-speed broadband.

Elsewhere, home and car credit specialist S&U (LON:SUS) issued a trading update this morning which showed that business was good over the Christmas period and that its financial results will “significantly exceed expectations”.

Broker Arden Partners believes there is strong potential for further growth at the company.

In a note on S&U, Arden pointed to a consistently strong funding position for the business, which provides ample headroom for both organic growth and further bolt-on acquisitions.

Analyst David Larkam said: “The company is trading well showing its strength in the difficult economic environment. The rating is undemanding and yield attractive. With Motor Finance showing what is possible, the shares offer good value for the growth to come.”

Broker Panmure Gordon has raised its price target for Debenhams (LON:DEB) to 67 pence from 60 pence today but retains its 'hold' rating.

It followed a meeting with management yesterday, said the broker, from which it took such positives as the company's multi-channel success and the ongoing programme of store refurbishments.

In the  smaller caps, KEFI Minerals (LON:KEFI), the gold and copper explorer with projects in Saudi Arabia, told investors today that it had conditionally raised £1.85 million before expenses through a “significantly over-subscribed” placing.

In all, Fox Davies Capital issued 61,666,667 shares on behalf of KEFI at 3 pence each. 

In a note the broker said today it was happy with the raising and that the price only represented a 10 per cent discount to yesterday’s closing price. The money will allow KEFI to continue the exploration programme on its three licences in Saudi Arabia.

FD Capital retains its ‘speculative buy’ recommendation on KEFI.

Meanwhile, Ambrian Partners issued a note on Anglesey Mining (LON:AYM), reiterating its ‘buy’ recommendation and 92 price target after the firm said  its 33 per cent owned associate Labrador Iron Mines (TSE:LIM) has signed a participation deal with a First Nation.

This agreement secures the support of the local Innu community (a tribe of the Uashaunnuat) in Labrador, and aligns core strategic stakeholders in the project, the broker said.

“This continues LIM’s recent run of announcements that further de-risk its iron ore projects as it removes the potential for disruption to the operations going forward. This is especially significant given that a local Innu tribe blocked access to the project for a short time in June 2010.”

Ambrian remains upbeat on Anglesey’s prospects and expects significant newsflow to come from drilling of its Parys Mountain property, where results are expected in the first quarter and where the ramp-up is continuing.

Meanwhile, Xcite Energy (LON:XEL, CVE:XEL) which is approaching the start of a long awaited work programme at the Bentley oil field in the North Sea, was the subject of a note by City broker Seymour Pierce.

Yesterday, the company hosted an analyst and media day in Dundee, where the newly built Rowan Norway rig is currently moored ahead of a development drilling programme.

In a note, analyst Dr Doug Youngson said the recent share price reaction was a sign that investors were desperate for any information.

“We feel that the DECC approval and subsequent departure of the rig should provide major drivers for the share price."

Any conversion of contingent resources into reserves should also enhance valuation, added the broker.

The share price performance will continue to be strong in anticipation of newsflow, he added. Seymour Pierce has a ‘buy’ recommendation on the stock with a 242p target.

 

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