Date: Wednesday 16 May 2012
LONDON (ShareCast) - Investec has maintained its buy recommendation and 40p target price for banking group Lloyds, saying it remains a buyer 'at this level of distress'.
"In a somewhat bizarre way, we are comforted by the fact that investors are increasingly dismayed by Lloyds's incredible shrinking 'core' business," the broker said.
"It signals tacit acceptance that Lloyds's balance sheet repair is so well advanced that attention can (rightly) move on to the anaemic returns that the group is set to generate for many years to come."
UBS has downgraded its rating for Xstrata from buy to neutral, prompting an identical ratings cut for the mining group's potential merger-partner Glencore.
Given Xstrata's disappointing first-quarter figures released on May 1st, UBS has slashed its earnings per share (EPS) forecasts for 2012 and 2013 by 21% and 25%, respectively. With the stock having outperformed other diversified miners by 11% since the start of February, the broker cuts its rating and slashes the target price from 1,475p to 1,080p.
On the other hand, UBS says that Glencore's EPS looks robust and no change is made to its forecasts for the group. However, with Xstrata suffering from lower realised coal prices, the broker also downgrades the stock and cuts its target price from 475p to 400p.
Jefferies has reiterated its buy recommendation and 550p target price for oil and gas group Ophir Energy after its joint venture with BG Group made its fifth consecutive gas find in Tanzania.
"Ophir/BG announced another discovery in Tanzania with Mzia, taking total success rate to five out of five on Blocks 1, 3 and 4…We see this as very positive for Ophir," the broker said in a research note this morning.