Wednesday tips round-up: easyJet, Afren

20th Nov 2013 08:30

easyJet on Tuesday took a page out of Ryanair's book by unveiling a special dividend which led to a more than doubling of its dividend yield to six per cent, thanks to its 50 per cent jump in pre-tax profits for the year ended September. Is that where the similarities end? After all, easyJet sees none of the demand weakness which its Irish rival has been reporting of late. That may be because a third of easyJet's capacity touches on France, Italy and Switzerland, where available seats overall are still expected to fall this winter (compared with the general intra-European rise), allowing the UK carrier to up its capacity and grab shares. Ryanair, nevertheless, retains cost advantages, and will fight back. Thus, another third of easyJet's capacity competes with its Irish rival on a city-pair basis although under 5 per cent in terms of direct routes. EasyJet shares have also outflown its rival's and, on 13 times 2013-14 earnings, are no longer cheaper. The gain is deserved. Still, going forward, Ryanair may yet have an edge left, says The Financial Times' Lex column. Investors in Afren are content following Tuesday's drilling report which suggested that the possible reserves within its Ogo resource could be four times larger than had been thought, at 774m barrels of oil equivalent. This would make it bigger than Afren's existing Ebok field off Nigeria and the biggest discovery Afren has made to date. A cautious note from RBC?Capital Markets, though, makes clear that more detail is needed on what exactly is there, in terms of the oil and gas mix. The main focus for Afren has been its assets in ?Kurdish Iraq. The completion of the pipeline into Turkey shortly would allow its Barda Rash field to be brought up to production of 35,000 barrels a day. The shares were about 120p in the summer. Although Ogo is a strong positive, until the outlook is clearer caution seems a wise approach, says The Times' Tempus. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB