Broker Round-up Part 2: Northern Petroleum, Range Resources and CentricaReported by Proactive Investors on Friday, 8 June 2012 (on June 8, 2012)
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With the Jubilee weekend now a distant memory, retail focus has turned to the next major event in the calendar – the London Olympics.
With just 49 days to go until it all kicks off, the high street is warming up for another spending extravaganza.
Brokers seem to share this view, with JP Morgan Cazenove predicting booming sales over the summer.
Despite their “weak fundamentals”, the heavyweight broker reckons the global sporting showcase could offer a short-term trading opportunity for investors in supermarket stocks ahead of first quarter results released next week.
It expects Sainsbury ’s (LON:SBRY) to keep up the good work and lead the way in like-for-like terms, slapping an ‘underweight’ tag on the stock with a target price of 267 pence.
JP Morgan rates market leader Tesco (LON:TSCO) as ‘overweight’, targeting a price of 406 pence and it expects the supermarket giant to comment on the operational turnaround in its statement. Elsewhere, the broker has Morrisons (LON:MRW) down as ‘neutral’ at 270 pence.
Supermarkets won’t be the only ones to benefit from the Games however.
Numis reckons toy manufacturer Hornby (LON:HRN) will kick start its turnaround with the launch of its London 2012 range, including limited edition model railway sets and a Scalextric Velodrome Cycling set.
After a tough trading period where the company reported a fall in profits, the broker sees things picking up – so much so it has upgraded the stock to ‘buy’ from ‘add’, such is its optimistic outlook.
JP Morgan also sees the public topping up their glasses during the bonanza.
The broker is sure more pints will be pulled at Young’s brewery (LON:YNGA) as punters from abroad flood the capital.
And the locations of The Cow, The Calf at Stratford and The Betjeman Arms at St Pancras, all on the main transport routes to the stadium, will ensure they won’t have to travel far to quench their thirst.
The broker initiates a price target of 700 pence against the current price of 616 pence, down more than 11 pence today, and retains an ‘overweight’ rating on the pub.
Sharing the glitz and glamour today that will certainly follow the Games was Northern Petroleum (LON:NOP), whose final-year results were “robust” according to Shore Capital, which upgraded the stock to ‘buy’.
Its 2011 results were better than fellow broker Westhouse Securities was anticipating thanks to lower-than-expected depreciation/impairment charges.
Revenues grew 64 per cent on the previous year, while profit was up to over €6 million after the company reported a loss in 2010.
The broker hopes to initiate coverage on the stock in the not too distant future.
Range Resources (LON:RRL) is set to pick up the pace according to Panmure Gordon, as its exploration and development activities are shaping up nicely.
The reserves at the North Chapman field in Texas have been upgraded by “good measure”, says analyst Leila Reddy, who is a ‘buyer’.
She reckons the share price is “undemanding” at current levels and set a target price of 14 pence. The current price of 8.7 pence, which has climbed 18 per cent today, is nearly half that figure.
Finally, Investec Securities advised investors to buy shares in British Gas parent company Centrica (LON:CNA) ahead of its pre-close updates, which the investment bank said should be “confident and upbeat”.
Analyst Angelos Anastasiou also noted that shares in the company have risen 7.5 per cent so far this year, outperforming the market by 8.5 per cent; a trend which she thinks should continue.
Anastasiou currently has a ‘buy’ recommendation with a 429 pence per share target on the stock compared with today’s price which stood at 314 pence, up almost 2 per cent today, at the close of play.
Links:  Full news story
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