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Broker Tips: Jadestone Energy, Shell, Rolls-Royce

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  • Berenberg Bank upgrades Jadestone Energy
  • Bernstein initiates coverage of Shell
  • Morgan Stanley upgrades Rolls-Royce
  • Kepler Cheuvreux upgrades Informa
  • RBC raises LondonMetric Property target price

Berenberg Bank has upgraded Jadestone Energy (LON: JSE) to ‘buy’, and raised the target price substantially from 105p to 140p. This is not surprising, given that the oil price continues to strengthen in a tight market disrupted by sanctions on Russia, one of the world’s largest producers of oil, and that OPEC is forecasting even stronger world oil demand this year. SP Angel says Jadestone’s increasing production (up 36% this year), robust revenues and no hedging has resulted in strong cash generation and no debt during last year. At close of trading yesterday, the stock was priced at 101.5p, a return of 19.4% YTD and 49.3% over 12 months.

Bernstein yesterday initiated coverage of Shell (LON: SHEL) with an ‘outperform’ rating, and a target price of 3,100p, while Berenberg raised the Shell target price to 2,975p (2,750p), rating it a ‘buy’. Last Thursday, Credit Suisse also started coverage of Shell with an ‘outperform’ rating and with a target price of 3,000p, highlighting how oil majors are well placed for energy transition towards renewables, the ‘megatrend of our generation’. The broker consensus is overwhelmingly positive, with only one broker having the stock on ‘neutral’. At close of trading yesterday, the stock was priced at 2,308p, a return of 42.3% YTD and 58.3% over 12 months.

Morgan Stanley has raised Rolls-Royce (LON: RR) to ‘over-weight’ (equal weight), while lowering the target price to 118p (132p). Analysts at the bank say the market has “woefully mispriced” the stock, and not yet priced in the upcoming recovery in the aviation industry. This means that the company’s earnings recovery could be sooner than expected. The broker consensus is neutral, with only one ‘buy’ from Berenberg. At close of trading yesterday, the stock was priced at 87.9p, a return of -28.4% YTD and -18.1% over 12 months, though over the past month the stock has recovered 12%.

Kepler Cheuvreux last Thursday raised publishing group Informa (LON: INF) to ‘buy’ (hold). Broker consensus is almost entirely positive, with Berenberg also rating the stock a ‘buy’. Informa is currently engaged in a renewal strategy that includes a four-year share buyback programme and a reallocation of investments to create a more focused, higher growth business. At close of trading yesterday, the stock was priced at 501.8p, a return of -2.9% YTD and -5.3% over 12 months. Meanwhile, on Monday UBS raised another publishing group Euromoney Institutional Investor (LON: ERM) to ‘buy’ (neutral), with a target price of 1,300p (1,080p). At close of trading yesterday, ERM stock was priced at 1,087p, a return of 17.5% YTD and 2.7% over 12 months, with particularly strong growth of 31% since March.

RBC raised LondonMetric Property (LON: LMP) target price to 325p (305p), with an ‘outperform’ rating, on the back of a strong set of results earlier this month, due to increased rental income from the warehousing and urban logistics sectors. LMP declared a total property return of 28.2%, outperforming the IPD All Property index return of 19.6%. Numis cut LMP to ‘hold’ (‘add’), with a target price of 300p. At close of trading yesterday, the stock was priced at 230.4p, a return of -18.7% YTD and -3.3% over 12 months.

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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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