Broker spotlight, including Catlin, Amlin, TalkTalk, John Wood Group, Petrofac, Serco and Ormonde


The end of hurricane season has led to a whirlwind of activity from Deutsche Bank, which has reshuffled its calls on the companies that insure against these natural catastrophes.

Catlin (LON:CGL) was the major beneficiary of this, moving to ‘buy’ from ‘hold’, while Lancashire (LON:LRE) went in the opposite direction, and Amlin (LON:AML) was downgraded to ‘sell’ from ‘hold’. Hiscox (LON:HSX) remained on ‘hold’.

“While earnings momentum is subdued, capital returns remain an attraction for investors in the subsector,” Deutsche told investors. 

“With this note we also reshuffle our ratings to reflect refreshed earnings expectations as well as a more qualitative view of strategic positioning and likely near term momentum.”

Elsewhere, the telco TalkTalk (LON:TALK) has set itself ‘unreasonable guidance’, according to the analysts at Berenberg, who’ve demoted the stock to a ‘sell’ from ‘hold’.

Sticking with the negative, JP Morgan Cazenove has lowered its recommendation on British Gas owner Centrica (LON:CNA) to ‘underweight’ from ‘neutral’.

Nomura, meanwhile, has given the oilfield services groups John Wood (LON:WG.) and Hunting (LON:HTG) the same sort of treatment, taking them down a notch to ‘reduce’ from ‘neutral’. It moved competitor Petrofac (LON:PFC) in the opposite direction.

Credit Suisse isn’t a fan of Serco (LON:SRP), the beleaguered support services group that last week launched a £550mln rights issue to bolster its threadbare balance sheet.

Going to ‘underperform’ from ‘neutral’, it told clients: “After the unveiling of significant onerous contract provisions and the risk of more to come, we see huge uncertainty around the operational cash flows of the business.”

The house also repeated its ‘underperform’ on Royal Mail (LON:RMG), which published results on Thursday.

Westhouse said the decline in the fortunes of the UK’s oil explorers has been overdone as it reiterated ‘buys’ on Ithaca Energy, Genel, EnQuest and Circle Oil

It also pointed to a number of other stocks that are sitting a discount to their discovered resource bases. They are Bowleven, Faroe and Parkmead.

“We argue that while there is near-term pressure on the oil price, a lower oil price environment will result in some correction on the supply side and if it does not come from OPEC this time, it will from outside OPEC (we think the US is the most likely),” said analyst Jamal Orazbayeva.

“We argue that for investors with a bit more patience and perhaps a more contrarian strategy, there is now an opportunity to cherry-pick stocks at large discounts.”

Among the tiddlers, Ormonde Mining (LON:ORM) stood out as SP Angel repeated its 8p target (current price 4.5p) following the final permit for its flagship tungsten mine in Spain.

“The project is at the low end of capital intensity and operating cost for the industry,” said analyst Carole Ferguson.

“The large resource offers scope for extending the mine life and provides valuation upside. Tungsten market fundamentals are positive with a deficit forecast in the medium term.”

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