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Message: Wall Street Journal today... 3rd paragraph mentions Africa Oil--AOI
Broker Briefing Note: Monday
By Andrea Tryphonides
You may be forgiven for thinking it is Groundhog Day in Europe. One week on from the general election in Greece and still no government. While this situation remains unresolved, trading in European equity markets will remain hesitant and a big question mark will continue to hang over the future of the euro zone.
- In addition to this, there are still concerns about the Spanish banking system, despite a move by the Spanish government to set aside €30 billion in additional real-estate provisions. Societe Generale continues to see dividend per share under pressure for Spanish banks, particularly Banco Bilbao Vizcaya Argentaria. As a result, the brokerage has downgraded BBVA to sell from hold. It said that Banco Santander emerges stronger from its analysis following the decree-law on provisioning of real estate assets. The bank is left with a hold recommendation.
- Meanwhile, Societe Generale has downgraded Nokia to sell from hold. “Although recent results for Nokia have been poor, we believe things are likely to get much worse,” begins the brokerage’s analysis. Societe Generale has revised forecasts to include a steeper fall in handset sales at Nokia, but the main change is in restructuring costs. Societe Generale now forecasts an additional €2 billion in charges for Nokia’s Device & Services business over the next two years. However, it warns that there could be a further substantial fall in sales with more restructuring. “On our calculations, such an additional fall could be enough to burn through most of Nokia’s existing cash pile and even bring into question Nokia’s very survival.” Stern words indeed.
- On a brighter note, Deutsche Bank has initiated coverage on a number of oil exploration and production stocks. It has started Salamander Energy, Premier Oil, Cairn Energy, Africa Oil and Afren all at buy. Tullow Oil, Ophir Energy and Bowleven are all started at hold. Deutsche Bank’s top sector picks are Afren and Premier. The brokerage said, “For both, production is ramping up into a higher price environment and our analysis suggests little, if anything, is being discounted for either company’s growth potential.
- ” Ophir and Africa Oil have been stand-out performers in 2012 and Africa Oil shares could double again said Deutsche. “We believe the shares may materially undervalue the Kenya onshore.” On Tullow, Deutsche said its exploration delivery remains deeply impressive.
In Sweden at the moment, the Stock Price for AOI is 59 = $8.60..had been 61 = $8.90 ..3 million in 4 1/2 hours ... with oil down $2 today, it could still move to $9.00 but, who knows for sure with the market flip - flops these days.
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