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Broker Tips: Berkeley Group, Pantheon Resources, Glencore

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  • Jefferies upgrade Berkeley Group to ‘Buy’
  • JP Morgan upgrades Virgin Money UK to ‘Neutral’
  • Canaccord Genuity raises Pantheon Resources target price
  • Berenberg lowers Anglo American target price
  • Barclays ups Glencore target price

Jefferies analysts have upgraded housebuilder Berkeley Group (LSE: BKG) to ‘buy’ after identifying a 100% yield over seven years and hiking their target price to 5,587p, from 4,703p. A number of factors are brightening the outlook: Berkeley’s joint venture with National Grid for St. William Homes in March is boosting land acquisition; investment in its regeneration sites is bearing fruit; working capital is set to increase; and so is delivery. All of which will lead to a “meaningful” increase in capital returns and push the company’s return on equity above 20%. Shares in the stock at close of trading yesterday were worth 4,124p, a return of -13.63% YTD and -9.94% over 12 months.

Liberum and Shore Capital reiterated a ‘buy’ rating on Virgin Money UK (LSE: VMUK), while Barclays gives it an ‘equal-weight’ rating and Morgan Stanley an ‘under-weight’ rating. Virgin Money UK, which provides banking products and services under the Clydesdale Bank, Yorkshire Bank and Virgin Money brands, became profitable this year, with earnings forecast to grow. JP Morgan said that rising inflation and negative GDP revisions were “starting to cloud the positive case for the banks” but nevertheless upgraded Virgin Money UK to ‘neutral’ from ‘underweight’. At close of trading, the stock was worth 174.1p, giving a return of -2.08% YTD and -9.77% over 12 months.

Oil exploration company Pantheon Resources (AIM: PANR) has “significantly increased” its resource estimates of what could be a major oil discovery in Alaska. Following successful drilling, Pantheon raised its oil-in-place estimate at the Theta West well by 61% to 17.8bn barrels, with a recoverable resources estimate of 1.78bn barrels, an increase of 48%. WH Ireland, in its Morning Comment yesterday, said it had always believed the area held promise, but said the scale of the upgrade was unexpected and “unambiguously positive”. Canaccord Genuity raised the target price from 250p to 280p and reiterated its ‘speculative buy’ rating on the stock. At close of trading yesterday, the shares were worth 138.9p, an impressive return of 78.65% YTD and 354.66% over 12 months.

Berenberg has maintained its ‘buy’ rating on Anglo American (LSE: AAL) but lowered the target price from 4,300p to 4,000p. Anglo American’s shares slumped more than 20% over the past two weeks, as investors reacted to unexpected cost increases and production guidance cuts, with rising FX and inflation cost headwinds adding to concerns. The outlook also darkened for certain sectors, with reduced production levels (vs. 1Q 2021) for copper (-13%), nickel (-8%), platinum group metals (-6%), iron ore (-19%) and metallurgical coal (-32%). The only exception was diamonds, which increased production by 25%. Shares in the stock at close of trading yesterday were worth 3,311.5p, a return of 9.8% YTD and 3.45% over 12 months.

Barclays raised the Glencore (LSE: GLEN) price target to 730p (680p) pence, with an ‘overweight’ rating. Shares in Glencore, after climbing steadily for 12 months, took a tumble last week, losing some 13% before recovering, and closed at 464.8p, a return of 23.96% YTD and 51.80% over 12 months. Barclays has also raised the price targets of a number of other mining stocks: Anglo American, to 3,400p (3,150p) with an ‘equal weight’ rating; Antofagasta, to 1,645p (1,600p), ‘overweight’; Endeavour Mining, to 3,000p (2,850p), ‘overweight’; Hochschild Mining, to 165p (155p), ‘overweight’; Fresnillo, to 880p (860p), ‘equal weight’; Petra Diamonds, to 115p (65p), ‘equal weight’; and Gem Diamonds, to 80p (70p), ‘overweight’. However, Barclays cut Rio Tinto to ‘underweight’, while raising the price target to 4,800p (4,400p).

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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