Broker tips: BP, Intermediate Capital Group, Beazley
Barclays's analysts hailed the new strategic vision set out by BP just the day before to reduce its carbon footprint to zero by 2050.
"The new set of ambitions and organisational structure announced is the reimagining we wanted for BP and its shareholders, effectively ripping up the rule book on the way that oil and gas companies have operated for over a century to focus on delivering the full skill set of the company to both reduce emissions and deliver value for shareholders," they said.
Clients would be wrong to underestimate the importance of the company's shift to low carbon businesses.
They also welcomed the new reporting structure that was introduced, as well as the roughly 30.0% of females that would now be assigned to the executive leadership of the energy group.
And while shareholders could be expected to be eagerly awaiting further details on how BP would meet its goals, the fact that management stuck to the 2021 financial targets and a commitment to grow shareholder returns were "critical".
Analysts at Canaccord Genuity hiked their target price for shares of Intermediate Capital Group after revising their earnings estimates for the alternative asset manager fir the next three years higher.
The main reason for the target price change was the higher price-to-earnings multiple now assigned by the broker to the firm's fund management arm for 2020 of 27.4, versus 21.5 beforehand and on a par with rival Partners Group.
Canaccord however continued to value ICP's investment company at price-to-net asset value multiple of 1.0.
Combined, the change in methodology meant that the target price was raised from 1,650.0p to 2,027.0p.
The analysts also raised their estimates for Intermediate Capital Group's earnings in 2020-22 by 9.0%, 7.0% and 7.0%, respectively.
Investors should take profits on Beazley shares, Jefferies argued as the broker downgraded the Lloyd's of London insurer to 'hold'.
After Beazley's first-half profit beat expectations the market is now too optimistic about improvements in underwriting profitability, Jefferies analyst Philip Kett wrote in a note to investors.
Unless 2020 is an unusually mild year for catastrophes reserve releases will not be enough to meet market expectations for improving combined ratios over the next couple of years, Kett wrote. He cut his rating on the insurer's shares to 'hold' from 'buy' and trimmed his price target to 611p from 616p.
"After a surprisingly euphoric reaction to last week's results … Beazley's shares now appear fairly valued to us," Kett said. He said the market's valuation of the company at 16.9 times 2019 earnings and 16.5 times 2020 consensus forecasts was fair.