In the first of our new weekly series, James Norris looks at broker upgrades over the last week.
- Edison upgrades Endeavour Mining to BUY
- Deutsche Bank upgrades AstraZeneca to BUY
- FinnCap raises target price for Omega Diagnostics
- FinnCap ups target price for Savannah Resources
Edison – Endeavour Mining (LSE:EDV, TSX:EDV)
Endeavour Mining has gained more than 15% since the publication last December of what broker Edison described as ‘an excellent set of third quarter results’. Endeavour has become one of the top 10 major gold producers globally, with seven mines and a portfolio of development projects, all in the West African Birimian greenstone belt. Edison increased its Q421 production forecasts for the Houndé and Sabodala-Massawa mines by 7.3% and 4.9% respectively, and expects Endeavour to hit the heights of its guidance range of 1,350–1,475koz gold for the full year. Endeavour’s performance has exceeded expectations on almost all fronts, and so Edison has upgraded its estimate of adjusted net EPS for Q421 by 10.3% and for FY21 by 13.9%.
Alpha Value, Deutsche Bank – Astra Zeneca (LSE:AZN)
Astra finished 2021 on a strong note, says Alpha Value, driven by a solid contribution from oncology, diabetes drug Farxiga, the Alexion acquisition and Covid-19 vaccine sales. Profitability has come under pressure, again, but this is not a major concern, as it should recover over time. Another concern, given Astra’s sizeable exposure to China, is the recent clamp-down on Chinese entities/drugs by the US. For Deutsche analysts, the FY22 risk is ‘largely dispelled’ by a positive mid-term story with plenty of catalysts to ‘sustain the enthusiasm’. Shares have gained 40% over 12 months on a steady rising trend, on the way hitting a 52-week high of 9,523p, a performance reflected in the fact that all brokers have a BUY or Overweight recommendation on for AstraZeneca.
FinnCap – Omega Diagnostics (LSE:ODX)
Omega Diagnostics is in a strong position to execute on its growth strategy, says FinnCap. Omega has raised £5m with up to £2m possible via an open offer to enable it to focus on the growth opportunities within its two core businesses, Health & Nutrition and Global Health. It has also sold its Alva site in Scotland for £1m, with the relocation to Ely estimated to yield c.£2m of annualised savings. FinnCap has forecast 2-year sales growth of 23%, a return to profitability in 2023 and a revised target price of 18p, up from the previous 7.3p.
FinnCap – Savannah Resources (LSE: SAV)
Shares in Savannah, which owns the Barroso lithium miner in Portugal, were volatile last week, gaining 15% on news that Portugal’s socialist party won an unexpected outright majority, and then losing 8.6% on news that legal action was being taken over the C-100 Mining Lease. However, for FinnCap, this volatility is merely a ‘wobble’, when set against the stock’s strong fundamentals. The Barroso mine is Europe’s only near-term source of spodumene, and so is a key part of the EU’s green transition. Since August, Savannah shares have jumped more than 35%, thanks to strong lithium prices, with the spot price for spodumene concentrate now at more than $3,000/mt. As a result, FinnCap has updated its valuation of Savannah to reflect a higher long-term price outlook, and upped its target price from 9.5p to 14p. Savannah shares opened trading today (16/2) at 4.34p.
