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Aug 2014
Buyback provides short-term fillip

Ophir Energy has provided a near-term support to its share price by announcing a $100m buyback programme in its H1 2014 results, which were otherwise in line with expectations. Ophir will drill three moderate impact wells in H2 2014 while the priorities in 2015 will be seismic activity across the portfolio and ongoing pre-development work on its LNG projects. Potential new hydrocarbon provinces in Myanmar and the Seychelles present longer-term opportunities but material catalysts appear limited in the near-term.

Aug 2014
Looking for improvements

Highland Gold’s trading update for H1 2014 showed that the company had achieved production of 120,121oz, below the run rate to achieve its maintained guidance of over 300,000oz for FY2014. HGM will be hoping for strong operational performance over H2 in order to achieve the improvements needed to meet guidance. We have maintained our 80p target price, but have downgraded from Buy to Add on the back of recent share price strength.

Aug 2014
H1 2014 results - issue unresolved

Cobham’s H1 results on 7 August were in line with consensus (albeit slightly below our estimates), with unchanged guidance (bar FX and the FD’s slight caution on 2015 margins) but, less positively, with another soft book-to-bill ratio. Improvement here and a sustained pick-up in Cobham’s short-cycle business orders (25-30% of group revenue) are key to achieving 2015 revenue guidance, which appears slightly optimistic to us. We remain particularly cautious on the US. Our EPS estimates and 230p PT are unchanged and we retain our Sell rating.

Aug 2014
Debt level continues to deepen

Balfour Beatty’s first half results, released ahead of schedule today alongside its further rejection of Carillion’s merger proposals this morning, show a further worsening in the average net position - one of our key concerns about the stock. The predicted average for the full year now looks likely to be close to £500m versus the company’s prediction in May of £375m. We believe the stock is being supported by continued bid speculation, which may prove short-lived. We reiterate our Sell recommendation.

Aug 2014
H1 2014 results - minor turbulence (again)

Meggitt’s H1 results on 5 August were somewhat soft in terms of revenue, margins and guidance (even allowing for the H2 bias), and they represented a third recalibration of market expectations over the past year as a succession of minor issues have accumulated. Nonetheless, the big issue, that of a sluggish Civil Aerospace aftermarket pick-up, seems to be improving, with orders up by 17% YoY. We cut our EPS estimates by 11% and 9% for 2014 and 2015 respectively and our PT by c.9% from 470p to 430p. We retain our Neutral rating.

Aug 2014
Risk/reward looks very attractive

We believe that the current weakness in the share price provides an entry opportunity for the stock that is trading at a 2015E P/CF of 1.8x. The stock is cheap compared to its peers and the key to our investment case is the start-up of the Greater Area Stella (GSA) development which can take the company’s production profile above 20kboe/d. We think there is no risk to the GSA initial annualised guidance of 16kboe/d net to Ithaca and the risk on timing of the start-up has decreased significantly after two delays in the past.

Aug 2014
Stepping out of the pack?

Strong interim results were boosted by a material improvement in the investment yield, hinting at what the group can deliver. Our FY2014 PTP forecast is unchanged at US$453.1m. This implies a still ‘dull’ ROE of 11.0% which supports our ongoing Neutral recommendation. However, a yield of 6.4% for 2014E, rising to 6.8% for 2015E is attractive – and Catlin may actually return surplus capital at the year-end. Whilst the ROE disappoints somewhat, investors are being paid to hold the shares, in our opinion.

Aug 2014
Stronger H2 expected

Randgold Resources’ Q2 results showed the importance of diversified operations, with Loulo-Gounkoto (L-G) making up for weaker performances at Kibali and Tongon. With both expected to overcome their issues in Q3, we expect a stronger H2 with higher production and lower costs than seen in H1 (561,046oz at US$693/oz). With the outlook set to brighten we maintain our Add recommendation, and increasing our TP from 5000p to 5650p on the back of changes to our model and an increase to our gold price forecast.

Aug 2014
Forecast upgrades

We were pleased with the performance detailed in ITV’s interims and remain positive on its trading prospects and underlying fundamentals. We have raised our FY2014E adjusted PBT estimate by 3% to reflect a more optimistic outlook on margins and forecast attractive medium-term EPS growth and substantial / sustainable dividend progression. We have raised our DCF-based target price from 220p to 228p, believe Liberty Global’s recent investment highlights the group’s strategic value and maintai

Aug 2014
Greater gearing to a shipping recovery

The recently completed merger with ACM Shipping provides Braemar Shipping Services with an improved competitive position and greater gearing to a cyclical recovery in shipping markets. In spite of increasing evidence of the latter, the group continues to benefit from diversification, with Technical underpinning an in-line financial performance for FY2014. Offering a total shareholder return of c.24%, including a 5.6% dividend yield, we resume research coverage with a target price of 545p and a Buy recommendation.

Aug 2014
Interims underpin story

These were solid interim results which highlighted the improved profit potential from its growth and efficiency programme. The 10% uplift in the dividend to 6.6p is also encouraging, as was the commitment to return surplus capital. We see three areas of opportunity in the short term that should be beneficial, notwithstanding more challenging markets: underwriting, investment income and tax. Our PTP and dividend forecasts are unchanged. Novae trades at 1.1x 2014E and 1.0x 2015E TN

Aug 2014
Investment plan

We were pleased with the momentum evident in last week’s interims. We have reduced our estimates (FY2015E adjusted PBT -6%) to reflect the announcement of a concerted investment programme, although we welcome this development which, combined with management change, corporate restructuring and internal initiatives, should energise the group’s high-quality, but somewhat disparate, portfolio of B2B assets. We have trimmed our target price from 570p to 554p, but note this benchmark still suggests attractive upside potential, and view the group as a takeover candidate.

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