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Broker Tips: Hargreaves Lansdown, Evraz, Union Jack Oil

  • Shore Capital and Berenberg upgrade Hargreaves Lansdown to BUY
  • Morgan Stanley reiterates Evraz OVERWEIGHT position
  • Zacks Research says Anglo Gold broker forecasting STRONG BUY
  • SP Angel reiterates Union Jack Oil STRONG BUY
  • Liberium Capital upgrades Gemfields to BUY

Hargreaves Lansdown (LSE: HL), the Bristol-based financial services company, announced a fall in profits due to reduced share-dealing revenues, as investors have swapped working from home for a return to the office. In the six months ended 31 December, revenues were down 4% to £291.1m, pre-tax profits were down 20% and net new business shrank 28% year-on-year to £2.32bn. Nevertheless, HL still holds a leading 43.3% market share of the UK’s consumer investing sector and the correction after the boost derived from the pandemic lockdowns was expected. Shore Capital and Berenberg are the only brokers with a BUY recommendation.

Evraz (LSE: EVR), a London-based steel manufacturing and mining company supplying the infrastructure industry, with assets mainly in Russia, but also in Ukraine, US and Canada, has seen its share price lose more than half its value in a month. Investors are no doubt worried by the unfolding crisis in Ukraine at the moment, and speculation about possible sanctions, but a more immediate concern is the news that Evraz could be demerging its coal interests. Morgan Stanley has reiterated an Overweight recommendation, while UBS and Goldman Sachs have both recently recommended SELL.

AngloGold (NYSE: AU) has had a difficult year, resulting in a 35% drop in net profit on rising costs and a 12% drop in output due to a restructuring and a halt in operations at Obuasi, a key asset. Despite these troubles, shares have gained 24% since end of January, which is unsurprising perhaps as the price of gold has climbed to $1,913/oz, its highest since June 2021, helped by geopolitical tensions over Ukraine, and by declines in US 10-year Treasury yields and the dollar index. With the restructuring under way, prospects of a continued recovery in the share price are improving. According to Zacks, one broker has a Strong Buy and five have HOLD.

Union Jack Oil (LSE: UJO) has announced that net revenue from its Wressle mine has reached the $3m landmark, since production restarted in August last year. As in-house broker SP Angel says, current production ranges at around 700 bopd but the potential is for more as the mine is currently operating on a restricted choke. Revenues, also from other UJO assets, have been helped by a rising oil price: geopolitical tensions over Ukraine have pushed oil prices to their highest since 2014, pushing Brent to near US$100/bbl, at a time of fast economic growth, already tight supplies and a lack of spare capacity. UJO today proposed, in light of its “excellent current performance”, that it intends to adopt a distribution policy of allowing the payment of dividends or of share buy-backs. SP Angel has a Strong Buy.

Gemfields (LSE: GEM), a Guernsey-based mining company that supplies coloured gemstones, has already had a strong 2021 but this year the upside could be as much as 28%, according to Liberum Capital. Gemfields operates the Kagem emerald mine in Zambia, the Montepuez ruby mine in Mozambique and an emerald exploration licence in southern Ethiopia. Given Gemfields’ customer base and net cash balance sheet, says broker finnCap, Gemfields is likely to declare a maiden dividend in 1Q22. Liberum recommends BUY.

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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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