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Broker Tips: Capita, Anglo Pacific, Energean

  • Peel Hunt upgrades Capita to ‘Buy’
  • Berenberg initiates coverage with LBG Media
  • Bank of America upgrades miner Anglo Pacific
  • Berenberg raises price target for Energean
  • Stifel upgrades Capricorn Energy

Peel Hunt has upgraded Capita (LON: CPI) to ‘buy’ (hold), but trimmed the price target to 48p (55p). On 7 June, Capita secured another government contract, this time a three-year extension with NHS England and NHS Improvement, reflecting its ability to retain contracts and continue to work with key clients. Broker consensus this year is positive: in March, Barclays reiterated an ‘overweight’ rating, lowering the price target 65p (80p); in April RBC Capital Markets reiterated its ‘outperform’ rating, also lowering its target price to 42p (50p). Shore Capital in March kept its ‘hold’ rating. At close of trading yesterday, the stock was priced at 28.24p, a return of -22.63% YTD and -27.03% over 12 months.

Berenberg on Monday initiated coverage of digital content publisher LBG Media (LON: LBG) with a ‘buy’ recommendation and a target price of 180p, on the strength of it having created “a wide competitive moat”, despite only having listed last December. Particularly attractive to the bank is the company’s global audience of 264 million social media followers and its ability to reach 64% of the UK’s “highly coveted, yet hard-to-reach” 18-34 year-olds, which the analysts say makes it an “industry-leading youth publisher” able to “outperform our base-case estimates”. At close of trading yesterday, the stock was priced at 125p, a return of -37.23% YTD.

Bank of America has upgraded miner Anglo Pacific (LON: APF) to ‘buy’ (neutral) and raised the price target to 230p (200p) on the basis of coal price tail winds. Berenberg also has a ‘buy’ on the stock with a target price of 300p, as the bank liked the company for its “attractive long-term exposure to energy transition metals and its natural hedge against cost inflation”. RBC Capital Markets has an ‘outperform’ rating, with a target price of 245p. At close of trading yesterday, the stock was priced at 154.6p, a return of 10.83% YTD and 5.36% over 12 months.

The broker consensus on Energean (LON: ENOG), a London-based oil company with assets in the Mediterranean and the North Sea, has been all positive. This month, Berenberg raised its price target for the stock to 1,540p (1,430p), with a ‘buy’ recommendation. Morgan Stanley has a price target of 1,500p, with an ‘overweight’ rating. Last Friday, news emerged that Energean chief executive Mathios Rigas had sold 5 million shares in an accelerated book-build to institutional investors for £55.3m, causing shares to drop 11% before recouping half the losses. At close of trading yesterday, the stock was priced at 1,155p, a return of 35.09% YTD and 54.62% over 12 months.

Stifel has upgraded Capricorn Energy (LON: CNE) to ‘buy’ (hold), with a strong increase in price target to 271p (211p). The broker also raised Capricorn’s NAV estimate by 5%, on the assumption that the contingency payments from the company’s Senegal oil project sold in 2019 would start in 2023 rather than 2024. Earlier this month, Capricorn announced a takeover by Tullow Oil (LON: TLW) in an all-share deal. JP Morgan says the combination of Tullow and Capricorn can add scale in terms of both production and reserves, and unlock growth. JP Morgan raised its target price for Tullow to 82p per share, while leaving that of Capricorn at 243p, giving Capricorn’s shares a ‘neutral’ recommendation. At close of trading yesterday, Capricorn’s stock was priced at 218p, a return of 15.77% YTD and 33.91% over 12 months, while Tullow’s stock price stood at 49.8p, a return of 7.21% and -17.30% over 12 months.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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