Broker tips: Tullow, ARM, Randgold

3rd Jul 2013 11:19

While the market reacted positively to Tullow Oil's first-half trading update on Wednesday morning, Investec has chosen to reiterate its 'sell' rating, saying that investors should be wary about development funding."Our view is that the commercial threshold will ultimately be breached in the Lockichar [Basin, Kenya]. However making this assumption brings the question of development funding forward. A good problem to have, yes, but Tullow is already selling assets and seeking farmdowns to fund its existing projects in Ugandan and Ghana. Therefore investors should be aware that, even at its size, Tullow is not immune to the funding discount the rest of its peer group experiences."UBS has upgraded its rating for chip designer ARM Holdings from 'neutral' to 'buy', saying that the stock's recent pull-back looks overdone.The broker explained that ARM has fallen 30% from its peak reached in May on the back of concerns over rising competition from Intel in mobile computing (through Samsung contracts), amongst other things. While some negative risks remain for investors to look out for UBS thinks that nothing has really changed.Citigroup has raised its rating for gold miner Randgold Resources from 'sell' to 'neutral' and lifted its target price from 3,926p to 4,491p.The broker said that the business does not have a high-cost profile or debt on its balance sheet, "nor a valuation which was as stretched as Fresnillo at higher gold prices, in our view". Randgold also has a "game-changing" new mine, Kibali, being commissioned in the next quarter, analysts added.