Broker tips: Tullow Oil, ITV, Imperial Tobacco

The brokerage described the ruling as “very good news” for the FTSE 250 group, as it is free to continue the development of its project, which is already 55% complete and expected to be online in mid-2016.

Following the International Tribunal of the Law of the Sea’s (ITLOS) ruling, Tullow will be subject to a no-new-drilling rule until a final decision is made by 2017.

However, the group’s current operations should be enough to meet the production targets in the meantime, the brokerage said.

“There are a number of additional wells that have already been drilled,” Canaccord analysts added in a note.

“These can be completed post first oil to support production in the event that no new wells can be drilled until the final ITLOS decision.”

Shares in Tullow, which has been much-mentioned as one of the next big targets in the emerging trend for Big Oil mergers and acquisitions, were down 2.18% to 408.90p at 11:59 on Monday.

The current year is expected to be the first year of growth in European TV advertising since 2010, according to research by Credit Suisse, with analysts expectations considerably undershooting the industry's optimism.

The Swiss bank's proprietary European advertising monitor research on Monday said 2015 was "shaping up to be strong" for the sector, with ITV highlighted as one of the best positioned.

A survey of European TV buyers from 14 agencies in the largest five territories in the third week of April, found the industry to be "consistently upbeat", especially in UK and Spain.

The main points to take away from the survey are that "buyers are still optimistic that 2015 should mark the first year of growth in TV advertising in all five territories since 2010" and have upgraded their forecasts for 2015 ad growth in three out of the five territories.

Credit Suisse also noted that it had seen "the widest gap" between media buyers' forecasts for 2015 and analysts' consensus expectations in the UK and Spain.

ITV Family net advertising revenue is expected to grow 6.6% in 2015, the bank said, versus a consensus analyst forecast of 4.7%.

"Spain and UK still show greatest short and long term upside potential," Credit Suisse said, with its survey suggesting strong near-term upside risks for ITV and Mediaset España in Spain.

It said it expected ITV to benefit from cyclical advertising recovery, the potential for re-transmission fees, its potential as a takeover candidate and upside from its ITV Studios production arm.

It has a 290p price target for ITV.

Imperial Tobacco is the top pick in the sector for broker Exane, as the industry returns to "normal service" after a tough two years.

While organic trends in food, beverages and household and personal care are set to be below par again in 2015, Exane noted that tobacco, in contrast, after a tricky two years, is "already looking at a return to usual service due to volume normalisation in Europe, a benign tax picture and the resolution of several price spats".

Although the merger between US Big Tobacco players Reynolds and Lorillard dominates the debate, Exane now sees "another leg" to the organic growth story.

Market leader Philip Morris International(PMI) has recovered from a tricky organic period in 2013/14, and also rebased mid-term targets, but has been "wounded by the mismatch between its international cash flows and US dollar dividends and share buybacks".

By PMI's own admission, it is close to the upper bound of its single A credit rating, a key priority, and needs to maximise its cashflows in 2015/16. PMI has led significant price hikes in Europe and is following a similar strategy elsewhere, with a small but bold move to raise prices in Japan "adding to dynamics elsewhere".

The main beneficiaries, Exane said, will be Imperial Tobacco and Japan Tobacco.

"PMI is the leader in markets covering 50% of IMT’s profits, primarily in Europe. This underpins our bullish stance.

"For JT, PMI’s attempt to raise Japan prices without a concurrent tax hike could be a positive precedent.”

British American Tobacco (BAT) has less crossover but has its own foreign exchange and merger and acquisition constraints.

Exane, which is the UK arm of French bank BNP Paribas, increased its forecasts for all four players, with currencies such as the ruble now turning for the better, and a better pricing outlook.