BATS is Smoking Its Rivals in Emerging Markets

Source from:  Proactiveinvestors UK Ltd 07/07/2015

British American Tobacco can continue to make significant investments into its brands and at the same time grow margins, says Deutsche Bank, which today upgraded its target price for the stock.

"BAT operates in the only staples sub-sector with real pricing power," analyst Gerry Gallagher said.

"In addition, BAT has a very significant EM [emerging markets] business where volumes are expected to outperform the industry."

Around 40% of the group's profit is made in Brazil, Canada, South Africa, Russia and Australia, the German bank highlighted as it repeated a 'buy' rating an increased the price target to 4,000p.

Elsewhere, Barclays Capital has looked at the house builders and had a shuffle. Bellway (LON:BWY), upgraded to 'overweight' to 'equal weight' has been favoured over Taylor Wimpey (LON:TW.) which moves in the other direction down to 'equal weight'.

Randgold Resources (LON:RRL) has been upgraded by Investec's mining team to 'buy' from 'hold' though predicated on little other the recent share price weakness it is something of a limp endorsement.

Investec, which has run the rule over all the larger miners, at the same time moved its Randgold target price to 4,971p from 5,184p. Even at this lower level, the target sees some 16% upside to the current price of 4,253p.

"Randgold is not generally faring any worse than its global peer group, with gold equities reflecting a lacklustre bullion price, notwithstanding global macroeconomic concerns.

"We remain reasonably positive on bullion and expect ongoing price support at the top end of the cost curve."

BMO Capital has upgraded Ophir Energy (LON:OPHR) to 'outperform' from 'market perform' on the same day that the oil and gas firm revealed production was 'on track' to meet market expectations and said the integration of the acquired operations of Salamander was progressing well.

In other coverage, South Africa-focused miner DiamondCorp (LON:DCP) revealed today it had raised the maximum under its open offer and placing at £5.27 million to advance the economics of the Lace mine.

The money raised from the placing and offer will be used to fund the £1.8-2.8mln working capital shortfall to bring Lace into production in H2 this year; the purchase of two dump trucks and the deposit on a high-volume optical and x-ray waste sorter to reduce the volume of internal waste rock from kimberlite ore prior to processing

Broker Investec said: "While only a modest raising, the strong over-subscription indicates that there is still good support for companies and sectors that deserve it." Shore Capital noted the diamond firm　had received an "overwhelming" number of applications under the excess facility, such that those applying for excess shares could only be allotted around 20.4% of the shares they had applied for. Enditem