Brokers' view: Collins Stewart
At the Wood Street-headquartered Collins Stewart, analyst Paul Brant is a fan of British heavyweight BAE Systems. He remarks that, although he is pessimistic on the ‘global defence sector’ as a whole, BAE should be able to cover a flat dividend to 2013.
He argues that, while volumes are ‘already collapsing in some segments’, BAE is expected to perform well as a result of its ‘broad EM [emerging market] exposure’, which stands in contrast to the ‘extreme US focus of the other majors’.
Noting that the shares currently yield 7 per cent, the ‘ability to cover its dividend adequately’ is described as a ‘positive catalyst’. He rates the shares as a buy with a target price of 330p.
Not a trap
AIM newcomer Trapoil – which only joined the junior market in April in a float that raised £60 million – wins the approval of analysts Thomas Martin and Gordon Gray. Mayfair-headquartered Trapoil focuses on exploration projects on the UK continental shelf.
They insist that the company’s portfolio ‘offers exposure to material upside with limited capital expenditure’, adding that, despite recent tax increases, the North Sea ‘remains a profitable place to invest’.
Identifying a full net asset value per share of 59p and a target price of 50p, they rate the shares as a buy.
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