Date: Tuesday 06 Mar 2012
Petrofac, the oil and gas engineering and investment firm, gets some kind words from Tempus in The Times.
The company has consistently raised its profits target and yesterday even beat revised guidance to deliver a year end increase of 25% to $539.4m. If the company can keep the order book filled with big engineering and construction projects and avoid the political risks of working in places like Iraq and Nigeria then the shares, currently trading at 13.5 times earnings, should head north says Tempus. Buy.
Abcam, which makes antibodies for various medical applications, is not as well received by Tempus. Trading at a very high 24 times earnings and involved in what may be a pricey bid for a US firm, Tempus thinks leave for now.
The guidance on BP is rather confusing. Tempus thinks the company will avoid a crippling payment following legal action by the US government over the Gulf of Mexico spill (but could still end up handing over $42bn!). The column believes some investors will want to take profits but with BP’s operations working well, the shares may well have further to go, despite impressive rises since the Autumn of 2011.
Questor, in the Telegraph, is more emphatic on BP, giving a clear hold rating but the argument is the same. Legal risks over the Gulf of Mexico spill appear to be receding and the company’s full year profits were ahead of expectations with management confident momentum can be increased. Trading at just 7.2 times earnings and getting closer to the share price level before the Gulf of Mexico spill, definitely a stock to watch.
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