Broker tips: BG Group, Bellway, African Barrick Gold

9th Dec 2011 12:25

Nomura has reiterated its buy rating and 1,850p target for oil and gas giant BG Group, as market chatter speculates that it may be putting a stake in its Brazilian business up for sale.While Reuters claims that the disposal could come within weeks, analysts at Nomura expect that a deal will not likely be reached until the second half of 2012 or even 2013 - "once production continues to ramp up from the pre-salt and BG is able to give more clarity on future growth options, most notably Tanzania LNG."Nevertheless, the broker says that the deal "makes sense" and while BG will want to manage its portfolio risk - with Brazil accounting for 40% of net asset value - "it will also want to protect its singe A credit rating as it goes through a period of heavy capital investment."Prime Markets says that Bellway's shares are "high enough for now" after significantly outperformed the broader house-building sector since August.Head of dealing at Prime Markets, Richard Curr, said: "As Prime Markets pointed out in our previous notes on housebuilders Barratt and Taylor Wimpey, one could be forgiven for thinking that the recession has passed by the housebuilding industry altogether this year, such is the pace of growth as illustrated by current and future reservations, and the level of investment going into land purchases for new developments. Bellway is no exception."Bellway has comfortably outperformed its rivals in the last few months and Prime Markets says that it has outperformed its own 200-day moving average benchmark of 678p, which "now acts as a new floor for the share price."The broker expects the price to hit 761p (current upper resistance) "before retesting the rising 200-day level" in the next week or so.Investec has cut its target price for African Barrick Gold (ABG) from 643p to 621p after the firm said that it will miss its annual production target of 700,000 ounces.Investec, which had forecast the firm to produce 711,000oz of gold this year, has now scaled this estimate back to 698,000oz and lifted cash costs to the high end of earlier guidance. Earnings per share predictions have been reduced accordingly."We have not altered our forecasts for future years, given that there should then be sufficient back up power to meet any further power disruptions. If it becomes necessary to use this back-up power on an ongoing basis, however, we will need to adjust our cash costs and therefore alter our earnings forecasts," the broker said.A hold rating is kept.BC