Broker tips: Tullow Oil, Sky, ARM Holdings

Tullow’s dividend suspension may have caught some investors by surprise on Wednesday, though analysts at Barclays hailed the decision, keeping an ‘overweight’ position on the oil group.

The bank said the move to suspend the decision was “pragmatic” given the company’s current capital commitments, while its new $500m cost-savings target “represents a statement of intent from management focused on ensuring Tullow remains a low-cost oil producer, developer and explorer”.

Shares in Sky dropped on Wednesday after the news that the company had paid 83% more to retain the majority of Premier League (EPL) rights in the auction for the 2016/2017 to 2018/2019 seasons.

However, UBS said: “Although the EPL costs for Sky are higher than expected, Sky has secured a better set of EPL rights.” Meanwhile, the net impact of the inflation should be net neutral due to cost savings and the scope to raise pricing on Sky Sports, it said.

ARM Holdings exceeded forecasts on Wednesday with its fourth-quarter results and consensus estimates are expected to rise, though a more subdued outlook has prompted broker Investec to place its ‘buy’ rating under review.

“We think the Q4 result and outlook comments should to be enough to support the stock after its strong run into the results, but further positive news may be needed for it to break out beyond the peak of its trading range over the last couple of years (c1,100p). We place our forecasts, target price and recommendation under review.”