Credit Suisse says European oil stocks will continue to outperform the market
12:00 pm by Jamie Ashcroft
proactiveinvestors.co.uk
The bank’s selected oil stocks are up 20 per cent in the year to date, versus a 2 per cent decrease during the same time for the Stoxx Europe 600 oil & gas index (SXEP) and a 9 per cent gain for Brent crude. European oil stocks will continue to outperform the market, according to banking heavyweight Credit Suisse.
Analyst Ritesh Gaggar says the bank’s strategists remain positive on global equity markets and he believes the E&P sector is a proxy for the ‘risk on’ trade.
In other words investor’s will buy stocks in the higher risk/reward oil sector as they become more confident and less risk averse.
He highlights that the bank’s selected oil stocks are up 20 per cent in the year to date, versus a 2 per cent decrease during the same time for the Stoxx Europe 600 oil & gas index (SXEP) and a 9 per cent gain for Brent crude.
Looking ahead, Gaggar’s view on the sector remains positive even though these stocks have already risen strongly.
He says his top picks in the sector have are made in the context of three themes. These include strong balance sheets, frontier exploration potential and possible merger and acquisition candidates.
Notably he upgraded his target for Afren ( LON:AFR) to 185p from 170p - current price 142p. The upgrade comes as Afren reported a new discovery in the Kurdistan region of Iraq today.
The analyst also upgraded his target for Genel ( LON:GENL), which is also active in Kurdistan, to 1,180p from 1,142p – current price 698p. However, he downgraded fellow Kurdistan operator DNO International to ‘underperform’ and cut its target to 9.4NOK from 10.2NOK – current price 9.2NOK.
Gaggar’s also upgraded Dragon Oil ( LON:DGO) with his target rising to 868p from 818p - current price 636p.
Meanwhile North Sea firm Faroe Petroleum’s ( LON:FPM) target is increased to 247p from 231p - current price 170p, while the target for EnQuest ( LON:ENQ) was raised to 158p from 127p – current price 121p, and Premier Oil’s ( LON:PMO) target was upgraded to 518p from 490p – current price 379p.
Tullow Oil’s ( LON:TLW) target is increased to 1,853p from 1,800p – current price 1,462p.
Also Gaggar repeated a 680p target for Africa focussed Ophir Energy (LON:OPH) – current price 509p, and the target for Falkland oil firm Rockhopper Exploration ( LON:RKH) was also maintained at 408p – current price 345p.
Elsewhere Asia focused Soco International ( LON:SIA) was downgraded to ‘underperform’, but its price target was increased to 352p from 313p – current price 288p. |
