Broker snap: Tullow's been oversold, says Galvan Research

10th Dec 2012 15:10

The recent sell-off at Tullow Oil has been overdone, according to Galvan Research, which labels the oil and gas explorer as a 'buy'."Rather as in the case of drugs giants seeing their shares marked down 10% in the wake of a trial disappointment, the market tends to over react on the downside when oil explorers hit a bump in the road," said Galvan's head of research Andrew Gibson.Including Monday's 1.37% gain (to 1,262p), the shares are down 8.35% over last week, after the firm announced on Tuesday December 4th that its Zaedyus-2 appraisal well offshore French Guiana came up dry and didn't find commercial hydrocarbons.Gibson said: "Tullow Oil is a case in point: shares fell sharply to one year support at around 1,200p, which in the opinion of Galvan Research puts the oil explorer into oversold territory."Tullow's track record of discovery is very good, and our view is that normal service will be resumed sooner rather than later as a steady flow new hydrocarbon discoveries picks up in early 2013."The broker said that the stock has return to the one-year support zone between 1,200p and 1,250p. "Our view is that only a sustained period of price action below this level will prevent an intermediate rebound back towards recent resistance at 1,350p plus," GIbson said.Bc