Peel Hunt today repeated a ‘buy’ recommendation with a 195p price target, which implies almost 60% upside to the current price of 123.75p.
“Despite representing a disappointing development from an exploration perspective, in our view the decision to exit Kurdistan may yield an unforeseen benefit in the form of making PCI a ‘cleaner’ acquisition target,” said Peel Hunt analyst Werner Riding.
Riding points out, as an example, that Petroceltic’s most recent suitor Dragon Oil could have faced a conflict of interest - as it also owns assets in Iraq, so it wouldn’t have been be able to own both projects.
“Therefore the decision to relinquish the Kurdish interests in effect removes this potential impediment.”
“In spite of yesterday’s write off, we flag Petroceltic trades beneath its inherent underlying asset value and therefore in our view continues to represent a buying opportunity.”