Broker tips: Tullow Oil, RBS, Premier Foods

1st Apr 2011 12:42

Citigroup has trimmed its price target on Tullow Oil to reflect the lower than expected price the oil group secured when it sold two-thirds of its Ugandan acreage to French oil group Total and China's CNOOC.It now has a 1,590p target price on the stock, down from 1,650 previously. It keeps its "hold/high risk" stance on the stock."While the sale proceeds were lower than our estimate of US$4bn pre-tax, it is a welcome conclusion to the stalled sale process, which was originally announced in January 2010," the broker said.Citi notes that Tullow's production could rise dramatically if drilling is successful in the Lake Albert basin in Uganda. Tax disputes Tullow is trying to resolve should not slow planned operational activity, it adds.Royal Bank of Scotland analysts have warned of tough times ahead for AstraZeneca, while keeping their "hold" rating on the drug giant."Although the company faces material headwinds in 2011, recent price data suggests that price rises for just two of its key products could counter the material impact of US healthcare reform on operating profit. This should provide support for cash flow generation, at least for this year."They estimate that the impact of those material price rises should be to support Astra's net cash flow from operating activities in 2011 at around the US$10.7bn reported for 2010.Also of great interest, RBS also believes that the company's fair value lies at £31.75 per share and they maintain their hold recommendation ahead of a US regulatory decision on Brilinta in July 2011.Morgan Stanley has lifted its rating on Premier Foods praising the Hovis bread and Branston pickle maker's efforts to tackle its balance sheet issues.It now has an "over-weight" rating on Premier, from "equal-weight" previously. Morgan Stanley has a 40p price target on the company, which trades on less than six times earnings, it notes."Balance sheet issues are largely resolved," the broker says, adding that after four years of integrating acquisitions Premier should be able to deliver profit growth."The environment is tough, with input costs rising and intense promotional activity, but Premier's guidance looks sufficiently conservative and the company has various self-help levers to offset these pressures," Morgan Stanley said.