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Broker tips: Dixons Carphone, Wizz Air, Tullow Oil

Thu, 9th Nov 2017 11:37


(ShareCast News) - Investec has upgraded its stance on Dixons Carphone to 'buy' from 'hold', keeping the price target at 185p.

The brokerage noted the stock has been down on the back of worries about downgrades, but said that any further material downgrades are unlikely, even though the group's first half results are likely to be weak given mobile headwinds and the timing of non-cash P&L adjustments.

"Valuation in our view is looking increasingly attractive with recent share price weakness overdone and risk/reward on the upside," it said.

In addition, while uncertainty surrounding mobile is likely to persist, Investec reckons Carphone retains a high degree of flexibility to deal with the challenges it faces.

The brokerage expects first-half pre-tax profit of 61m, down 58% on the year, with the drop driven in part by last year's one-off profit items. On the other side of the ledger, it expects around 14m profit progression across UK Electricals, Nordics & Greece.



Analysts at JP Morgan boosted their target price on shares of Wizz Air following the budget carrier's second quarter figures.

According to the investment bank, the airline's 9% beat on the bottom line translated into a roughly 3% rise in the firm's guidance for fiscal year 2018.

Implicitly, that meant management was being cautious on the outlook for the second half of the year.

Yet, "we believe it reflects a sensible degree of caution given the high-end pace of capacity growth and some inflationary pressures," they said.

The analysts also saw upside risk to the firm's implied guidance for traffic growth of approximately 24%, offset by possible headwinds for market capacity growth from higher fuel costs.

All in all, JP Morgan revised its estimates for the firm's financial year 2018 earnings per share from 2.16 to 2.21 and for 2019 from 2.52 to 2.66.



Tullow Oil raised its production guidance on Wednesday thanks to higher than expected output from its TEN and Jubilee fields in Ghana, leading research analysts at Credit Suisse to up their target price on the group's shares from 205p to 240p.

The London based oil and gas exploration firm raised its full-year guidance for oil production from its West African operations from 78,000-85,000 barrels of oil per day (bopd) to 85,000-89,000 bopd.

Tullow forecast roughly $400m of free cash flow for itself in the current financial year, driven by higher oil prices and increased production, helping the group better maintain its debt position.

Nonetheless, Credit Suisse analysts noted that Tullow's Ugandan operation was the big question mark on the company's horizon, as continued delays in securing pre-emption agreements and government approval had already pushed projects slated to be in the financial investment decisions stage in 2017 into the next financial year.




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