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The Expert View: Ophir Energy, Prudential and Greggs
Our daily round-up of analyst recommendations and commentary, featuring Galliford Try and Barclays.
by Harry Brooks on Mar 27, 2012 at 05:01
We’ve rounded up some of the best comment from analysts to give you their views on Ophir Energy, Prudential, Greggs, Galliford Try and Barclays.
Oriel backs Ophir Energy on Tanzanian gas bonanza
Nick Copeman, analyst at Oriel Securities, has reiterated his 'buy' recommendation on Africa-focused oil explorer Ophir Energy (OPHR.L) on news that the company's Jodari well in Tanzania contains far more gas than expected.
According to a statement from Ophir Energy released yesterday, the Jodari exploration well contains an estimated 3.4 trillion cubic feet (TCF) of recoverable gas, up from the pre-drill estimate of 2.2TCF. Nick Cooper, chief executive officer of the company, noted that the find is the biggest in Ophir's history.
Copeman, meanwhile, said that the find could have the potential to support a third liquefied natural gas train. Currently the company is planning a two-train plant in the country, which is well located to export LNG to energy-hungry China and India. Over at Investec, Stuart Joyner increased his target price from 277p to 480p.
Shares in the group closed at 473.1p on Monday, up 71.1p or 17.69%.
Credit Suisse lifts target price for Prudential
Christopher Esson, analyst at Credit Suisse, has raised his target price for life insurance and financial services firm Prudential (PRU.L) following full-year results that came in ahead of his expectations.
The Pru recorded an operating profit for last year of £2.07 billion, some 4% higher than Esson's and consensus estimates. The dividend for the year rose 5.6% to 25.19p, in line with expectations.
'The recent result from Prudential was again difficult to fault,' Esson said. He added that neither of the major concerns that were raised ahead of the resuts, weaker growth in Asia and possible fallout from the tough economic situation in the states, were realised.
Based on the resilient trading results Esson has lifted his target price from 880p to 950p.
Shares in the group closed at 795.5p on Monday, up 12.5p or 1.6%.
More updates from Credit Suisse:
- RusPetro (RPO.L), 'outperform' (initiation of coverage), target price: 332p (initiation of coverage)
Liberum Capital warns on Greggs following sausage roll tax grab
Patrick Coffey, analyst at Liberum Capital, is preparing to downgrade his sales forecasts for bakery chain Greggs (GRG.L) following George Osbourne's decision to impose VAT on all hot food sales.
The announcement reportedly came as a surprise to Greggs, and together with other food retailers it will lobby against the decision ahead of its proposed implementation on 1 October.
Coffey noted that the extent of the impact is uncertain at this point. 'There are many grey areas. The company is unsure of the split between hot and cold products. Regulating the VAT increase will be a challenge. However, Greggs will be forced to raise prices on core products.'
The analyst said he does not expect Greggs to pass on the entire 20% tax rise to its customers, meaning that gross margins will also be hit. Coffey has cut his target price by 6% to 443p on the development, and has retained his 'sell' recommendation on the shares.
Shares in the group closed at 520p on Monday, up 1p or 0.19%.
More updates from Liberum:
- Kingfisher (KGF.L), 'buy' (unchanged), target price: 395p (was 345p)
Peel Hunt cheers dividend growth at Galliford Try
Robin Hardy, analyst at Peel Hunt, has increased his target price for homebuilder Galliford Try on the basis of rising profits and dividend yield.
The analyst noted that during the 2009 rights issue the firm promised £60 million of profits before tax in 2012, a pledge that many believed to be unrealistic. 'This figure is now largely in the bag and indeed we now expect this figure to be beaten,' he said.
Recent interim results from the group indicated that trading is running ahead of predictions, and Hardy has upgraded his pre-tax profit forecasts for the coming three years as a result.
Hardy also drew attention to the group's dividend yield. In 2011 it hit 2.7%, and the analyst predicts it to ramp up to 5%, 5.6% and 6.3% in 2012, 2013 and 2014 respectively. Based partly on this increasing yield the analyst has increased his target price from 650p to 825p.
Shares in the group, which features in Citywire Top Stocks, closed at 625p on Monday, up 13p or 2.12%.
More updates from Peel Hunt:
- Aberdeen Asset Management (ADN.L), 'buy' (was 'hold'), target price: 280p (unchanged)
- Anite (AIE.L), 'buy' (unchanged), target price: 165p (was 150p)
Morgan Stanley sees bright future for Barclays
Chris Manners, analyst at Morgan Stanley, has increased his target price for Barclays Bank (BARC.L) as he believes the group's investment banking division is well placed to benefit from industry-wide changes in the years ahead.
'We think that Barclays stands to benefit as banks rationalise their portfolios and market shares shift,' Manners said, adding that he thinks wholesale banks could return to 12-14% return on equity over the next two years as a result of these changes. He said that his expectation of a £6 billion pre-tax profit at the bank this year should provide a significant cushion.
The analyst also said that he is 'cautiously optimistic' about early signs of an economic recovery, which would further brighten the outlook for the bank.
Based on these factors, Manners has increased his 2012 and 2013 earnings per share forecasts by 8% and 6% respectively, and lifted his target price from 258p to 283p.
Shares in the group closed at 247.1p on Monday, up 2.6p or 1.06%.
More updates from Credit Suisse:
- Royal Bank of Scotland (RBS.L), 'underweight' (unchanged), target price: 27p (was 25p)
More about this:
Look up the shares
- Galliford Try PLC (GFRD.L)
- Prudential PLC (PRU.L)
- Greggs PLC (GRG.L)
- Ophir Energy PLC (OPHR.L)
- Barclays PLC (BARC.L)