Brokers' views: Panmure Gordon

Panmure Gordon appears bullish on the oil and gas sector, with the broker, in its ‘Daily Bore’ note, bestowing buy recommendations on BP, BG Group and Heritage Oil.

Analyst Peter Hitchens is a fan of Heritage Oil, noting that, having finalised the sale of its Ugandan operations to Tullow Oil for $1.45 billion, the Canadian ‘upstream’ explorer is ‘now in a position to start to look at spending this money’, with the board ‘looking at paying a special dividend of 75p to 100p a share’. 

Heritage’s shares, he argues, currently 414.1p, are ‘looking undervalued’, particularly given the group’s asset value of 555p a share. ‘On a fully diluted basis,’ Hitchens writes, ‘and prior to the payment of a special dividend, Heritage has cash backing of 245p a share, while we believe it has asset backing of a further 310p a share’. 

Retail recommendations

Over in the retail sector, number cruncher Jean Roche reiterates her buy recommendation and £24.76 price target for Next, currently trading at £21.69. 

Regarding its valuation as ‘attractive to peers’, she thinks that ‘the clothing retailers in particular can continue to surprise on the upside through calendar 2010’, adding that ‘although the market expects the UK macro backdrop to weaken slightly, retail sales have been resilient, especially over the last two months’.

Other preferred stocks in the retail universe include Marks & Spencer, a buy with a 395p price target, Ted Baker, which the broker believes is worth buying up to its 608p target, and internet and catalogue home shopping counter N Brown, currently 229.8p and for which a 320p target price has been set.