Broker tips: Tullow, Wolseley, London and Stamford

30th May 2012 11:28

Credit Suisse has reiterated its outperform rating and 1,841p target price for oil giant Tullow, highlighting developments in Guyana and undervalued operations elsewhere.The wildcat Jaguar-1 well in Guyana is "looking good", according to operator Repsol, which sends an encouraging message to 30% stakeholder Tullow, Credit Suisse said in a research note. Meanwhile, the broker says that recent updates on its operations in Kenya and Ehtiopia are positive, though not much of this long-term play is being priced into Tullow's shares.UBS has lowered its price target for plumbers' merchant Wolseley from 2,650p to 2,500p following Tuesday's third-quarter statement, which showed deteriorating conditions in Europe. The broker has maintained its buy rating on the stock."We still believe that fundamentals are positive for Wolseley, in particular: (1) the significant growth potential from both market share take and cyclical recovery in the US; and (2) a strong balance sheet expected to be net cash by end of CY12 giving flexibility to invest and/or return cash to shareholders." Jefferies has maintained its hold recommendation and 116p target price for real estate investment trust London and Stamford, but says that the group's full-year results show that it has the 'spending power' for increasing opportunities in the future.However, Jefferies says that investors are increasingly questioning the sustainability of the dividend which it believes is only 0.65 times covered from adjusted EPS. The broker thinks that the company requires around £800m of acquisitions to achieve cover of 1.0 times.BC