LONDON (SHARECAST) - With gold prices jumping after the announcement of further quantitative easing (QE) from the Federal Reserve last night, Nomura has maintained its 'bullish' view on the sector.
"Following yesterday's Federal Open Market Committee (FOMC) announcement of a new open-ended QE programme, gold prices have reached as high as $1,775/oz. Gold equities, which remain historically cheap on a price-to-earnings and price-to-net present value basis, should continue recent outperformance," the broker said on Friday morning.
The broker rates Petropavlovsk, Polymetal, African Barrick Gold and Centamin as 'buys', keeps Avocet Mining at 'neutral' and Randgold Resources at 'reduce'.
Ahead of Imperial Toabcco's pre-close trading update next Friday, Panmure Gordon has reiterated its 'buy' recommendation and 2,900p target price for the cigarette and tobacco giant.
The broker says that the current 20% discount to the peer group (price-to-earnings ratio basis) is too great: "We continue to regard this discount as too large given its attractive cash generation (free cash flow yield is 8% in FY 2012E) and believe the discount should narrow on evidence that Imperial’s organic growth strategy is delivering results."
JD Wetherspoon's financial year has got off to a great start and the pubs group is the cheapest stock in the sector, according to Jefferies.
Nevertheless, Jefferies said: "There is no explicit guidance in the statement but we are comfortable with our FY13 forecast for LFL sales of c2%, which may yet prove to be conservative."
The broker says that JD Wetherspoon's valuation is the lowest in the peer group despite a 13% compound earnings per share (EPS) growth rate (FY12-14).