Broker Round-up Part 2: Anglo Asian Mining, Horizonte Minerals, VANE Minerals and Alliance PharmaReported by Proactive Investors on Wednesday, 23 May 2012 (on May 23, 2012)
The call of the day from UBS was estate agents Savills (LON:SVS).
The Swiss broker reckons the stock should appeal to value investors now the share price has fallen 20 per cent in the last couple of months.
The share price has dipped further today to 303.6 pence, well below the broker’s target of 370 pence, which was lowered by 15 pence given the uncertain economic climate.
The broker has however upgraded its rating to ‘buy’ from ‘neutral’ due to the “resilient” London market and a recovery in the Asia and Pacific region.
A company which has seen shares drop even more dramatically is HomeServe (LON:HSV).
But the outlook is rather bleaker for the emergency home repairs group.
Shares fell 29 per cent on Tuesday after HomeServe announced it was shrinking its UK operations as a result of an investigation by the Financial Services Authority over allegations of policy mis-selling.
Both Morgan Stanley and Jefferies have upgraded the company with neutral stances but both remain cautious given the persistent risks to the stock.
“We do not see 15% upside to our price target as compelling enough for a fresh money buy, but if we held the shares we would not sell down here,” said Morgan Stanley, which dropped it target price significantly to 185 pence.
Jefferies followed suit, lowering its target to 160 pence from 195 pence.
Amlin (LON:AML) and Catlin (LON:CGL) were named as US banking giant Morgan Stanley’s top picks in a note on the London market insurers this morning.
The broker says both stocks are attractively valued but is less sure about Hiscox (LON:HSX) and Lancashire (LON:LRE).
It does not see many catalysts for the share price at Hiscox but sees positive momentum in the company’s retail business.
The broker remains bullish on the outlook for the sub-sector as trading updates for the start of this year have been “broadly positive”.
Deutsche Bank has cut sports betting website Sportingbet’s (LON:SBT) target price by 10 pence to 39 pence on the back of the Spanish government tax request.
The taxes are estimated to amount to around €17 million.
It believes the market is overreacting to the injunction against the company in Spain however given the lack of impact Europe has on its profits, and maintains its ‘buy’ rating as a result.
Small cap mining companies from across the globe featured in the broker notes today.
With solid results announced today, Azerbaijan-focused gold producer Anglo Asian Mining (LON:AAZ) is certainly one to keep a close eye on, says broker Fairfax.
Analyst John Meyer repeated his ‘buy’ rating, highlighting the increase in earnings and “relatively low” operating costs in the former Soviet state.
However, Meyer adjusted his target price for Anglo Asian to 70 pence from 72 pence previously due to his lower gold price forecast for the current year, which has been reduced to US$1,600 from US$1,800 per ounce.
“The Gedabek gold resource now looks far larger than had been forecast and the mine is sure to extend well beyond its original six year mine life,” he added.
Shares nipped up 0.4 pence, or 1.2 per cent, today to 33.9 pence.
Elsewhere in mining, Brazilian miner Horizonte Minerals (LON:HZM) has signed outline terms for an earn-in deal with Canadian exploration junior Magellan Minerals for its Agua Azul gold property.
Panmure Gordon analyst Alison Turner noted that the property is not part of Horizonte’s core exploration portfolio and said that, whilst small in itself, the deal demonstrates Horizonte’s commitment to extract value for shareholders from every asset in the portfolio.
“We would note that we had previously ascribed no value to Agua Azul so this deal does demonstrate the potential value hidden in the Horizonte portfolio, which, if unlocked, could in aggregate provide a value uplift,” added Turner, who leaves her ‘buy’ stance and 25 pence target price unchanged.
Shares edged up 0.25 pence, or 2.9 per cent, today to 9 pence.
North of the equator, VANE Minerals’ (LON:VML) renegotiation of two outstanding convertible loan notes to limit possible dilution to other shareholders has been described as “impressive” by broker Northland.
“The new loan note will enable the company to continue to utilise the revenue generated from its Mexican gold operations to explore its prospective copper porphyry and uranium projects in the US,” it said.
Shares rose 0.06 pence, or 7 per cent, to 1 pence in trading today.
Broker Numis expects branded medicines specialist Alliance Pharma (LON:APH) to have a stronger second half to the year in line with the launch of its toxicology product.
It added: “We also expect sales of Anbesol [oral pain relief] and Ashtons & Parsons Infant Powders [teething powder] to pick up now that supply issues are "largely resolved".”
The broker retains its ‘buy’ recommendation and has a 37 pence target on the stock, which implies 28 per cent upside to the current price of 29 pence.
Links: Full news story
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