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Tech Capital

Broker spotlight: Tullow Oil, Travis Perkins, Talk Talk, SuperGroup and Sunrise Resources


Tullow Oil (LON:TLW) investors enjoyed a favourable weekend ruling by an international maritime tribunal that allowed it to continue developing its TEN oil field off the coast of Ghana.

Last month, investors became aware of a maritime border dispute between Ghana and Ivory Coast which could delay Tullow's multi-billion dollar Tweneboa, Enyenra and Ntomme (TEN) oil project.

But The Hamburg-based International Tribunal for the Law of the Sea (ITLOS) ruled on Saturday the project could continue on the condition that Ghana does not start any new drilling in the area.

Broker VSA thinks that whatever the final outcome is, Tullow will be able to pursue the development of the TEN field within either country.

“Having this project on stream by mid-2016 is important for Tullow as it would provide the necessary cash flow for the company to support its debt related payments.”

JP Morgan, meanwhile, said it anticipates a repeat of commentary on TEN in this week’s trading update from Tullow.

“We also look for an update on the status of pipeline negotiations across Kenya and Uganda and an update on the potential to increase contingent resources in the South Lokichar basin given recent drilling and ongoing extended well tests.”

The weekend DIYer may be a rarer breed these days but that isn't stopping the building trade in general making progress, if JP Morgan's upgrade to Travis Perkins (LON:TPK) is anything to go by.

It shunts the target price on the shares up to 2,300p from 2,100p before. The rating is "overweight".

The broker said the bears have been saying the construction market may slow pre- general election or see aggressive action from the competition.

"However, trading year to date suggests neither is happening; the market remains robust and the group continues to take share. Management has reiterated FY revenue guidance. The group remains committed to its expansion plans and is unconcerned by competitor rollout of similar formats," said analyst Emily Biddulph.

Also in broker land today, telecoms group Talk Talk (LON:TALK) gets a thumbs up from Credit Suisee, which raises the share price target to 425p from 300p. The rating is a repeated 'overweight'.

It reckons the firm will exceed its revenue growth guidance (driven by fibre, TV and mobile subscriber growth) and therefore get close to its implied full year March 2017 underlying earnings target of £475mln. The broker forecasts £465mln - 14% ahead of consensus.

Conversely, the same broker is downbeat on global equipment giant Rotork (LON:ROR), cutting the price target to 2,315p from 2,535p, saying oil and gas headwinds are building.

It has reduced its group 2015 EBITA forecasts by 4% to £148mln. US broker Jefferies has also taken a red pen to the shares - cutting them to 2340p.

Fashion chain SuperGroup (LON:SGP) has been given a boost in the form of an upgrade from RBC Capital. It raises the rating on the shares to 'outperform' from 'sector perform' and advances the target to 1,150p from 1,000p.

Among the small caps, recent testwork at Sunrise Resources’ (LON:SRES) County Line project in the US showed a diatomite product could be generated to commercial standards for use in  filtration, the firm told a wider update on its Nevada projects.

Diatomite is mainly used, after heat treatment with or without flux addition, in the filtration of beer, wine, fats and fruit juices and also as industrial filler.

House broker Northland Capital Partners said: "The initial production of the higher-value filtration grade diatomite product from the County Line Diatomite deposit is a very important development for the company.

“Previously the large proportion of broken diatoms from Sunrise’s preliminary testing seemed to be a potential limiting factor in the production of filter grade product.

“This latest work demonstrates that this is not the case and significantly improves the attractiveness of the project.”

Alecto Minerals (LON:ALO) has unveiled an initial non-JORC code resource of almost a quarter of a million ounces of gold at the Kerboulé project in Burkina Faso, which it acquired last year from Kaizen Discovery

The positive result was hailed by Northland, which said it demonstrates why the Company acquired the Kerboule Gold Project last year.

“In the current market conditions where assets are considerably undervalued, it makes sense for juniors acquire post discovery projects when ounces in the ground can be bought at a lower cost than would be required to drill them.”

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