Broker tips: Tullow Oil, WPP, Kaz Minerals

The bank said Tullow is gaining momentum as it re-starts the development of the TEN fields offshore Ghana and resolves the Jubilee turret issue.

"Combined with a firmer oil price these fields should underpin a year-end refinancing that allows management to redirect investors' attention towards its value creation (Guyana and Kenya) and harvesting (Ghana and Uganda) activities."

Over the weekend, the International Tribunal for the Law of the Sea concluded its three-year assessment of the Ghana/Cote d’Ivoire border dispute and its ruling, that the border remains to the west of the TEN fields, has released the brakes on the stalled development. RBC now expects Tullow’s updates on 8 November and 10 January to focus on the business returning to normal.

WPP is likely to fall short of full year guidance and may face difficulties hitting its medium-term earnings growth targets, warned Morgan Stanley as it downgraded the advertising agency behemoth to 'equal weight' from 'overweight'.

Morgan Stanley, which cut its WPP share price target to 1,600p from 1,930p, also cautioned that is likely that the market's structural fears over agencies will see any early resolution.

After organic net sales fell 1.7% in the second quarter to drag the first-half down 0.5%, with half-year margins flat in constant currency terms versus a full year target of +30bps, the company has targeted full year organic net sales growth at 0-1%, after boss Martin Sorrell tugged down guidance from 3% in December and 2% in February.

While Sorrell said the third quarter saw July fall 2.5% but August "a little bit more encouraging", Morgan Stanley analyst Patrick Wellington forecasts the quarter will see net sales drop 1.5% with all three months negative year on year.

For the fourth quarter he predicted growth of 0.9% thanks to easier comparative from last year and as a new Walgreens contract kicks in, which would bring the year to -0.4%, still behind guidance.

Although there are fears over whether WPP can maintain its medium-term 10-15% EPS growth target, Wellington's team are still confident about the ad industry's prospects however.

"We think the industry slowdown is mainly the function of low GDP growth and the FMCG (and some other sectors) pressure on marketing expense. This has led to the associated procurement pressure on suppliers, including agencies, and some consequent price indiscipline among competing agencies," the analyst wrote.

Copper miner Kaz Minerals faces the greatest potential impact from a predicted fall in prices of the commodity, warned Morgan Stanley as it downgraded the stock to 'underweight' from 'equal-weight' after a recent strong performance.

While the company’s rating was downgraded, its 12-month target price was hiked to 480p from its previous 360p.

According to the US investment bank, Kaz’s risk-reward has reversed as the supply of copper increases in the market.

"With the greenfield projects now almost fully commissioned, the operational derisking is complete and the copper price will become the main equity driver," Morgan Stanley said.

"Our commodities team sees weakness in the copper price into the next year as 945kt of additional supply enters the market."

The mining company's target price of 480p implies 33% downside from its current share price, the largest figure in its copper coverage.