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The Expert View: Avocet Mining, AstraZeneca and Invensys
Our daily round-up of analyst recommendations and commentary, featuring Novae Group and EMIS Group.
by Harry Brooks on Jul 03, 2012 at 05:01
We’ve chosen some of the best comment from analysts to give you their views on Avocet Mining, AstraZeneca, Invensys, Novae Group and EMIS Group.
Canaccord downgrades Avocet Mining on production warning
Tim Dudley, analyst at Canaccord, has downgraded gold miner Avocet Mining (AVM.L) from 'buy' to 'hold' after the group slashed its production forecast from its operations in Burkina Faso.
On Friday the miner lowered its 2012 production guidance by 15% as a result of the ores it has dug up at its Inata mine proving more difficult to process than it had hoped, together with a shortage of excavating equipment.
'Friday’s news harks back to the Avocet of old, relegating the company's progress (in regards to confidence) back five years,' Dudley said. 'More importantly, the downgrade calls into question Avocet’s expansion plans, specifically whether the expansion will provide growth or just offset grade and recovery decline.' The analyst has cut his target price for the shares by 59% to 100p.
A raft of analysts from JP Morgan, Numis and RBC also acted swiftly in the wake of the disappointing news, downgrading the shares.
Shares in the group closed at 77.00p on Monday, down 13.05p or 14.49%.
Seymour Pierce says 'reduce' AstraZeneca on Amylin buy-in
Mike Mitchell, analyst at Seymour Pierce, has reiterated his 'reduce' recommendation on pharmaceutical firm AstraZeneca (AZN.L) following news that it is to buy US-based diabetes drugsmaker Amylin in an alliance with Bristol-Myers Squibb.
In a deal worth $7 billion Astra will pay $3.4 billion for its share, valuing the loss-making company's shares at $31 apiece. Mitchell was far from impressed by the news, stating that the deal emphasises 'the desperation of the business in terms of pipeline-filling'.
He also criticised the terms of the deal, under which Astra will not have equal governance rights to 'key strategic and fniancial decisions' until it pays an additional $135 million. 'Considering the long-standing position of AZN to look for external opportunities for product development, we are uninspired by the final terms of this deal,' he said.
Over at UBS, meanwhile, analyst Gbola Amusa reiterated his 'buy' on the shares in the wake of the deal, saying the price paid was 'reasonable' and asserting that the impact on earnings per share will be positive by 2014.
Shares in the group closed at £28.76 on Monday, up 23p or 0.81%.
Oriel tips Invensys amid takeover rumours
Harry Philips, analyst at Oriel Securities, has reiterated his 'buy' recommendation on rail engineering and IT firm Invensys (ISYS.L) amid rumours that Chinese integrated rail giant China South Locomotive is considering buying the company. Invensys has since denied that it is engaged in any takeover discussions.
'This is not a new story but clearly in the wake of the recent Emerson announcement the speculation can only increase,' Philips said, referring to last month's news that it had been in talks with the US business. Although no deal was agreed with Emerson, Philips said the talks are a good sign, adding 'it is a question of when the bid comes rather than if'.
However, an Invensys spokesman told Reuters on Monday that the company is not in any takeover talks at present. Philips said of a possible takeover that 'It is not necessarily going to beimmediate but when it starts, it is a once in a generation asset that has to belooked at.'
Shares in the group closed at 226.50p on Monday, up 3.80p or 1.71%.
Peel Hunt downgrades Novae Group
Sarah Lewandowski, analyst at Peel Hunt, has downgraded insurance holding company Novae Group (NVA.L) from 'buy' to 'hold' following reports that a significant number of underwriters in the company’s Zurich office have resigned.
According to reports in the trade press about 10 employees (out of a total of 27) have packed their bags following the exit of chief executive Gunther Saacke and chief underwriter Will Schuerch last month. The two senior staffers reportedly left as they were unhappy about autonomy over and constraints on capital, Lewandowski said.
'Further defections are rumoured to include the heads of agriculture, engineering and credit and surety. This seemingly co-ordinated walk-out raises questions over the feasibility of Novae renewing the current Zurich book of business,' Lewandowski said.
Shares in the group, for which Lewandowski has a target price of 362p, down from 416p previously, closed at 360.00p on Monday, down 5p or 1.37%.
Merchant Securities lifts target price for EMIS Group
Roger Phillips, analyst at Merchant Securities, has upped his target price for healthcare IT systems business EMIS Group (EMIS.L) as he believes trading is improving 'across the board' at the firm.
The analyst has increased his 2012 revenue forecast by 10% to £88 million and his earning before interest and tax forecast by 9% to £24 million.
As well as a strong performance from the company's EMIS Web division, Phillips touted the company's operations in Australia, and he said business intelligence could also prove to be a big earner before too long.
'Provision of business intelligence data services to NHS bodies is underrated by the market in terms of how it could scale for EMIS in future years, with multiple possible contracts to be designed against no natural competition (as no other vendor has more than 60% of UK patient records),' he said.
Shares in the group, for which Phillips has a target price of 700p, up from 600p previously, closed at 590.00p on Monday, down 22.50p or 3.67%.
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Look up the shares
- AstraZeneca PLC (AZN.L)
- Novae Group PLC (NVA.L)
- EMIS Group PLC (EMISG.L)
- Avocet Mining PLC (AVM.L)
- Invensys PLC (ISYS.L)