Panmure retains 'buy' rating on Wentworth, slashes target price

29th Jun 2015 09:31

Panmure Gordon has kept a 'buy' rating on Wentworth Resources and reduced its target price, citing a reduced production profile.On Friday, Wentworth announced a US$ 7.6m gross equity raise at market price, by way of a private placement, in order to fund the business through to the start of cash flow from Mnazi Bay, Tanzania.In a research note Panmure analyst Colin Smith said it had reduced its target price for Wentworth from 65p to 50p in light of risk factors."We remain buyers of the stock, but take a more cautious view in light of the continuing delays getting to first production and the use of equity, rather than debt financing," Smith said in a note.Panmure reduced its gross production forecasts for Mnazi Bay for 2015 and 2016 to 22m cubic feet per day (from 25mmcfd) and 120mmcfd (from 130mmcfd)."That results in a minor increase in our forecast loss per share for 2015 to 1.4c and a 23% reduction in our earnings per share forecast for 2016 to 8.7c, including the impact of dilution," Smith said.The researcher said while Wentworth appeared well placed, if Tanzanian authorities do not contract further gas supplies in the near term, it is not clear how over-supply would be managed.This could impact Wentworth's gas sales, Panmure believed.Shares in Wentworth fell 4.62% to 31p at 09:39 on Monday.