Broker tips: Aston Martin Lagonda, Premier Oil
A day after Aston Martin Lagonda's first trading update after floating in London last month, the upmarket carmaker received positive write-ups from analysts at Deutsche Bank and JPMorgan Cazenove.
In its third-quarter update, the company said it expected full-year sales to come in at the top end of expectations at up to 6,400 vehicles, after selling 1,776 in the quarter, double the same period last year, with a 22% increase in first nine months of the year to 4,075. Adjusted operating profits were up 32% to £160.3m and profit before tax 16% to £23.9m in the year to date.
Chief executive Andy Palmer said assembly of first DBX prototypes started on schedule, with full production to begin in 2020.
"These strong results give us confidence that we will meet our full-year targets with sales at the top end of the range," Palmer said. "This will pave the way for future growth as we prepare to begin production of the breakthrough DBX model at our new plant at St Athan, and as we receive further orders for new models including the DBS Superleggera and special editions."
Deutsche Bank initiated with a 'buy' recommendation on the "British luxury icon" based on a target price of 2,000p. Luxury icon with 105-year heritage
The bank's analyst Tim Rokossa noted that Aston Martin has been "professionalized" over the last four years under Palmer, with its 2,900 employees selling around 5,100 vehicles last year, generating £876m of annual revenues and an EBITDA margin of 23.6%.
With a 105-year heritage "amplified by its association with the James Bond franchise", the analyst said the manufacturer "caters to a very exclusive, underpenetrated customer group that is more resilient to economic cycles and much less price sensitive than the average car buyer".
Meanwhile, Cazenove kicked off its coverage with an 'overweight' rating and its target price also at £20.
Analysts at Canaccord Genuity lowered their target price on British oil and gas outfit Premier Oil on Friday, noting the firm's current projections may be "a little optimistic" given the recent oil price weakness.
With Premier's revised guidance of 80,000 barrels of oil per day, down from its previous 80,000 to 85,000 estimate as a result of "some unplanned and extended downtime" at certain UK producing assets, the Canadian broker saw fit to lower its target price on the firm from 200p to 190p.
"We understand these are now back on and current production rates are 85-90 kboed, with up to 95 kboed achieved on individual days," said Canaccord.
The broker also highlighted a continued "strong performance" from Premier's Catcher project, with contracted oil production rates anticipated to increase from 60,000 barrels per day to 66,000, demonstrating its "good subsurface and facilities performance".
"FY18 guidance on operating costs remains $17-18/boe, and total capex is now expected to be $365m (down from $380m)," noted Canaccord.
Canaccord also noted that it was "no secret" that the company has been looking to bolster its UK presence to allow for a more beneficial use of its UK tax losses, but said there had been no further news on this.
Despite this, Canaccord reiterated its 'outperform' rating on the stock but said the recent oil price weakness may suggest that pricing levels were "a little optimistic".