Broker tips: Petra Diamonds, Inmarsat, HSBC

By

Sharecast News | 29 Jun, 2017

Updated : 11:48

Analysts at Investec marked down their target price for Petra Diamonds following the company's warning the day before on full-year guidance and that it would seek to renegotiate the covenants attached to its debt.

The broker's Marc Elliot cut his target price on Petra Diamond shares from 110.0p to 87.0p and reiterated his recommendation to 'sell'.

Elliot now saw increased risks around the firm's asset base and pointed out the challenges which Petra was facing in South Africa on account of the proposed mining charter.

Ahead of the company's 24 July update, the analyst also cautioned he would not be surprised to see capital and operating expenditures raised in comparison to previous guidance.

In time, the company's multi-year efforts to revamp its portfolio of historical mines should deliver "considerable" value, he said.

Analysts at Deutsche Bank reiterated their 'buy' recommendation on shares of Inmarsat following the successful launch of its S-band satellite for the EAN network.

With IAG already onboard as its anchor customer, the broker expected more airlines to sign-up over the coming months.

The EAN combined the S-band staellite with a mobile terrestrial network or 'complementary aviation ground component', allowing commercial and business airlines to offer mobile satellite services to airlines flying over the most frequented European routes.

In a nutshell, the broker expected to see the same chain of events at Inmarsat as occured with its Global Xpress network.

Once its satellites had been launched and the system was operational, the airline contract wins followed.

HSBC got a boost on Thursday after Morgan Stanley upgraded the lender's shares to 'overweight' from 'equal weight'.

The US investment bank's analysts also increased their target price to 850p from 745p, saying they were expecting HSBC to have a strong capital surplus over the next three years.

The impact of Brexit and the uncertainty surrounding the final outcome of the deal with the EU has led to a certain amount of uncertainty for financial services firms, but MS believes that has been overplayed to an extent.

"HSBC still has c.30% of its loan book in the UK ($264bn) and investors are cautious on the UK outlook given uncertainty over Brexit, politics and a squeeze on the consumer from rising inflation," MS analysts said.

Last news