Broker tips: Premier Oil, ICap, Go-Ahead

In the process they upgraded their recommendation on shares of Ophir Energy and Premier Oil while downgrading stock in Det Norske, Genel and Ithaca Energy.

"Those two points appear to have been enough to see many investors revisit the sector with more forward-looking optimism in recent months and increasingly ascribe value to delivery of 2016 operational goals," the analysts said in a research note sent to clients on 21 June.

With crude oil futures having recovered to $50 per barrel, equity analysts at Barclays opted to 'mark-to-market' their price assumptions, increasing their 2016 Brent forecast to $44 a barrel and nudging their 2017 estimate from $55 a barrel to $57.
The broker also continued to factor in a gradual recovery in oil to $70 per barrel from 2018 onwards.

On the basis of the above, it rollowed forward its net asset value estimates by one year to the end of 2016. As a result, Ophir Energy was now their 'top-pick' and not DNO, Premier Oil was upgraded from 'equal-weight' to 'overweight' and Tullow Oil kept at 'overweight'.

Bank of America-Merrill Lynch upgraded ICAP to ‘buy’ from ‘neutral’ with an unchanged price target of 500p, saying the stock’s recent underperformance has added valuation appeal to a compelling strategy.

It noted ICAP shares have dropped 19% this year, which is around 18% more than the All Share and attributed much of the weakness to macro/referendum concerns.

The bank said it continues to see ICAP as well placed, especially post the NEX separation. NEX is the company which will endure once ICAP sells the bulk of its voice assets to Tullett Prebon.

“We have supported the company’s separation of its voice broking from the electronic assets (NEX Group), and believe that these businesses should have a vibrant future,” BofA said.

Liberum upgraded Go-Ahead Group to ‘buy’ from ‘hold’ but trimmed the target price to 2,740p from 2,860p.

It said the market’s overreaction to the group’s recent trading update presented a buying opportunity.

“The halving of long-term margin guidance at the GTR rail franchise and the potential for a narrow miss of the £100m bus profit target were disappointing. However, the share price reaction exceeded any reasonable assessment of value reduction,” the brokerage said.