Price target increased

Beach Petroleum (BPT)


Chart: Share price over the year to 25/11/2011 versus ASX200 (XJO)


Share Price: $1.365

Price target increase: UBS – $1.45 (was $1.12)

Broker calls: UBS – Neutral, Citi – Buy

P/E: 23.09

Market Cap: $1,495 million

Beach Energy (BPT) has been one of the top performing stocks this year, up an impressive 108% for the year. The share price has barely taken a breather, rising 15% this month alone. The oil and gas minnow got the thumbs up from Citigroup following its strong September-quarter result; the broker raised its target price to $1.40.

Higher oil and gas demand and improved Cooper Basin access saw sales revenue rise to $151 million, a 39% jump on the previous period. Richard Batt, of Shadforth Financial Group says that Beach could easily draw predator attention from the likes of BHP for its gas shale wells in the Cooper Basin.

Plenty of other brokers are keen on the stock, with several recently raising price targets above $1.45 a share, including UBS and Macquarie. UBS says that upcoming drilling is likely to offer some upside, nevertheless it has a Neutral stance on the company. Meanwhile Macquarie has a buy rating on it, seeing positives in its Western Flank conventional crude project.

‘While it’s encouraging to see Beach deliver strong operating cash flow and incremental reserves in the Western Flank area, the market will focus on news flow surrounding Cooper Basin shale,’ says Macquarie. ‘Expect the market to gain greater comfort from further encouraging drilling results, subsequently endorsed by a credible farm-in partner along with an independent resource booking.’

We covered BPT in September in the article ‘Is This Rising Energy Star Right For Your Portfolio‘.



Programmed Maintenance Services (PRG)


Chart: Share price over the year to 25/11/2011 versus ASX200 (XJO)


Share Price: $2.02

Price target: $2.60 (JP Morgan)

Broker Buys: JP Morgan – Outperform

P/E: 9.68

Market Cap: $239 million

On the back of the recent strong interim result, brokers Australia-wide have upgraded recommendations and price targets for Programmed Maintenance Services. Citi was the exception to the rule, however it has retained a Buy recommendation and shaved off just 2 cents from its price target of $2.26.

JP Morgan has an Outperform, raising its price target to $2.60 and saying that PRG’s results show the strength of this company, with any softness to be more than offset by the resources and government sectors in 2012. Likewise UBS, Deutsche and RBS are bullish, with the three brokers placing Buy ratings on the company and increasing their price targets. All three brokers believe that strong value exists for the stock, which they say is trading on a very attractive multiple.



RuralCo (RHL)


Chart: Share price over the year to 25/11/2011 versus ASX200 (XJO)


Share Price: $3.45

Price target: $4.45 (RBS)

Broker Buys: RBS – Buy

P/E: 12.86

Market Cap: 190 million

RuralCo (RHL) is RBS’s top agricultural pick, with the broker pointing out the company has delivered a great result in tough conditions. It believes that RHL will continue to pay strong dividends, with its strong balance sheet allowing it to take advantage of any opportunities that come its way. As such, RBS has hoisted its price target 17% to $4.45, a 29% premium to the current share price.

The company reported an increase in NPAT of 24.3%, with gross profit up 16.5%. ‘Rural merchandising and fertiliser grew 22.7% on pcp in gross profit on the back of good seasonal conditions, improved procurement and reduced member leakage,’ it said. 


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