Broker tips: Glencore, Wood Group, African Barrick Gold

21st Aug 2012 12:29

Commodities producer and marketer Glencore produced a 'big beat' in its first half, according to Jefferies, leading the broker to reiterate its 'buy' recommendation and 400p target price for the stock.As for the proposed merger with Xstrata, Jefferies says that it still expects Glencore to bump up its offer from 2.8 to 3.0 Glencore shares per Xstrata share "but our conviction regarding a bump is weakening"."In the event that there is no bump and no deal, we would be less positive on the outlook for Glencore and Xstrata shares. We are much more positive on the outlook for the merged entity."Credit Suisse has reiterated its 'outperform' rating and 925p target price for Wood Group, saying that the oil and gas services firm outdid its UK peers with its first-half results."At our target the stock would trade at 15.0x [2013 earnings], a premium to the sector, which we believe is justified given the better balance sheet than history and strong organic growth," Credit Suisse said.Westhouse Securities has downgraded its recommendation for African Barrick Gold (ABG) from 'strong buy' to 'neutral' following the recent surge in the shares.The holding company of ABG announced last Thursday that it is in talks with China National Gold Group about the possibility of selling its stake in the London-listed miner to China's largest gold producer."ABG is up 36.6% since our 'strong buy' recommendation on the 23rd of July; hence we are now moving our recommendation to 'neutral', despite recognising the potential upside from a bid for Barrick's holding," said Westhouse analyst Rob Broke.BC