Broker tips: British Airways, Tullow Oil, Unite

17th Sep 2009 13:03

The share price of British Airways has almost doubled since the beginning of July but broker Goldman Sachs says there is still time for investors to get on board. The US investment bank has added the British airline to its 'conviction buy' list, and suggested that despite the strong gains already made by the share price there is potential for the shares to advance by a further 45% if revenue starts to pick up.British Airways' lucrative North Atlantic routes means the airlines' profits should increase more rapidly than many of its competitors once demand for air travel picks up.It's a case of 'another day, another major oil discovery' for Irish oil company Tullow Oil which has announced two important finds this week that Panmure Gordon thinks have the ability to transform the outlook for the company.'We believe that, on conservative reserve expectations, Tullow has asset backing of approximately 850p per share. However, it has embarked on a major drilling campaign that could add significant reserves and value. The Venus discovery [in Sierra Leone] has opened up new drilling potential over the next twelve months,' Panmure Gordon said, explaining its decision to up its price target from 1150p to 1500p. 'The wells proposed over the next 12 months could add a further 2000p to our asset value. If we assume that it achieves only a 30% success rate (which on a historic success rate is very conservative), this would result in an asset value of approximately 1500p per share,' Panmure Gordon said. Highly geared student accommodation firm Unite has eased its debt position through an £82m fund raising exercise, giving it more scope to take advantage of depressed property prices in London.The company said the proceeds from the firm placing and open offer will be used to fund the acquisition of new development sites between now and the early part of 2011 in London, with the sites coming on stream in 2012.Broker KBC Peel Hunt has reiterated its 'hold' recommendation on the shares. 'Operationally Unite has proven resilient with anticipated rental growth of 10% for the 2009/2010 academic year. Demand for student beds in London remains strong and well in excess of supply, the broker notes.