LONDON (SHARECAST) - Analysts at Seymour Pierce have this morning raised their price target on shares of temporary power solutions provider Aggreko, while reiterating their “buy” stance on the company´s shares.
This followed a visit to the company´s new bespoke manufacturing facility in Dumbarton, Scotland. In their opinion, the £22m purpose built site highlights how Aggreko’s manufacturing expertise is a key source of competitive advantage, in so far as it allows the outfit to react quickly to new opportunities. The broker also calls attention to the cost savings which accrue to the company as a result of its relative size in the market for 1MW class engines.
Due to the above, Seymour Pierce indicates that it remains a Buyer of the shares with an increased £27 target price (previously £25). In their view Aggreko has a robust business model to tap into unrivalled growth opportunities. Furthermore, they are of the belief that in its IPP business the gap between supply and demand for power is unlikely to abate anytime soon.
Following a meeting with ASOS, partly to discuss new forecasts following the change in accounting date from March to August, analysts at Seymour Pierce came back reassured that earnings momentum is unlikely to slow and that there remains a wealth of opportunity to drive sales. They could not, however, identify a catalyst for a re-rating of the stock, which is valued at 39.5 times its fiscal year 2013 fully diluted earnings.
Nevertheless, Seymour Pierce is confident that the company can achieve its longer term target of £1bn of sales, and because of this has decided to maintain its hold recommendation, while at the same time upgrading its price target from 1,600p to 1,900p, toward the upper end of the recent trading range.
Merchant Securities has decided to place its valuation of Falklands Oil and Gas under review after the explorer announced the discovery of six Tertiary aged gas bearing reservoirs at Loligo.
While it believes that the “scale of the resource is potentially enormous,” its analysts are cautious given that the reservoir was unable to produce a good sample and because the water saturations were reported to be high.
In that same vein, the broker adds that: “From our perspective, obtaining a fluid sample was really the whole point of drilling the prospect. It is frustrating that this was not possible; however, it could now be possible to design a fit for purpose test for a second well. For now, we believe that much more analysis of the data must be performed in order to draw conclusions.”