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The Expert View: Tullow, African Barrick and Aberdeen Asset Management
Our daily round-up of analyst recommendations and commentary, featuring Rolls-Royce and Hammerson.
by Harry Brooks on Jul 24, 2012 at 05:01
We’ve chosen some of the best comment from analysts to give you their views on Tullow Oil, African Barrick Gold, Aberdeen Asset Management, Rolls-Royce and Hammerson.
Canaccord cuts target price for Tullow Oil
Thomas Martin, analyst at Canaccord, has reduced his target price for Tullow Oil (TLW.L) as a result of continuing technical difficulties with the firm's Jubilee oil field operations in Ghana.
Although Martin said Tullow has an enviable track record in unlocking hydrocarbon reserves he said that the shares are now trading in line with his net asset value estimate (NAV), while there are considerable discounts on offer elsewhere in the sector.
The analyst expects more bad news from Ghana in the months ahead, where particles of clay have been clogging the sand screens at the base of wells. 'Whilst management has suggested the problems in Ghana are largely behind them, we believe they will continue to be an issue into 2013,' he said.
'With 36% of our risked NAV attributed to Ghana, resolution of the production issues at Jubilee is central to the Tullow investment thesis.'
Shares in the group, for which Martin has a target price of £13.50, down from £17 previously, closed at £13.74 on Monday, down 56p or 3.92%.
Westhouse puts African Barrick Gold under review
Rob Broke, analyst at Westhouse, has put his recommendation for miner African Barrick Gold (ABG.L) under review following the publication of a disappointing set of half-year results.
In the six months ended 30 June production came in at 297,742 ounces, a 14% decline on the same period of last year, and production over the past three months was lower than Broke had expected. Revenues fell 8% to $534,467.
'We have placed our recommendation under review, previously Strong Buy and 525p, in anticipation of further information at the company’s interim results presentation which is being held this morning,' Broke said. 'We are expecting to revise our guidance downwards following this disappointing second quarter.'
Shares in the group closed at 315.09p on Monday, down 62.31p or 16.51%.
Peel Hunt upgrades Aberdeen Asset Management to 'buy'
Stuart Duncan, analyst at Peel Hunt, has upgraded financial services business Aberdeen Asset Management (ADN.L) from 'hold' to 'buy' following a trading update that revealed resilient sales of higher-margin products.
'Overall, flows were broadly as expected and the overall assets under management were relatively resilient in what was a difficult quarter. The trend remains consistent inthat higher margin equity inflows are offsetting outflows from lower margin product areas,' the analyst said.
Duncan forecasts a dividend for the year of 10p, up 11%, which he said reflects the group's strong balance sheet. 'With upside now of almost 20% to our target price, which is unchanged at 300p, we upgrade our recommendation to Buy,' he concluded.
Over at RBC analyst Peter Lenardos upped his target price by 2% to 280p on the back of the results.
Shares in the group closed at 245.20p on Monday, down 6p or 2.39%.
UBS ups target price for Rolls-Royce, warns on long-term growth
Charles Armitage, analyst at UBS, has increased his target price for engineering firm Rolls-Royce Holdings (RR.L) following its disposal of its stake in International Aero Engines (IAE) to US firm Pratt & Whitney, but he warns that the move isn't good for long-term growth prospects.
Selling the stake has boosted the analyst's 2012 earnings estimate, but he said longer-term growth will be lower as a result of the disposal. 'Civil aerospace, which we believe is the main rationale to own the company, in 2013 will make up about 42% of group sales and 45% of earnings before interest, taxes and amortisation, while the more cyclical Marine and Energy sectors grow from 31% to 44% of sales,' he said.
The analyst retains a 'sell' rating on the shares. 'Although we expect reasonable (4% per annum) profit growth, the expected poor cash generation results in lower fair value multiples,' he concluded.
Shares in the group closed at 836.50p on Monday, down 22.50p or 2.62%.
Investec lifts target price for Hammerson
Alan Carter, analyst at Investec, has increased his target price for real estate investment trust (Reit) Hammerson (HMSO.L) following the publication of its half-year results.
The results were broadly in line with analyst expectations, Carter said: earnings per share came in at 10.2p (+6.3%), the dividend per share was 7.7p (+5.5%) and net asset value (NAV) stands at 535p (+0.9%).
'The big news this year from HMSO was the near-total sale of its office assets (formerly 11% of the total portfolio) which will complete later this year,' Carter said. 'It is worth noting with some irony that the NAV was held up by a strong performance from City Offices and Value Retail – the property valuation for UK and French retail assets was in fact down.'
The analyst's target-price revision follows the upward re-rating of the large Reits over the past month, and he retains a 'hold' recommendation on the shares.
Shares in the group closed at 456.10p on Monday, down 4.90p or 1.06%.
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Look up the shares
- Tullow Oil PLC (TLW.L)
- African Barrick Gold PLC (ABGL.L)
- Aberdeen Asset Management PLC (ADN.L)
- Rolls-Royce Holdings PLC (RR.L)
- Hammerson PLC (HMSO.L)