Analysts at Berenberg upgraded exploration and development firm Cairn Energy from ‘hold’ to ‘buy’ on Friday, stating “significant progress” was yet to be reflected in its current share price.
Berenberg highlighted that India’s finance minister, Nirmala Sitharaman, introduced a taxation laws amendment bill on Thursday, which will effectively withdraw retrospective tax demands made by the Indian government to Cairn in 2014.
The German bank stated the proposal would refund any amounts taken in payment by the government and return Cairn to the position it was in prior to the claim.
“In effect, this would mean a refund of circa $1.0bn-1.1bn. This is clearly a huge step forward for Cairn and significantly increases our confidence in a material, near-term payment from the Indian government,” said Berenberg, which also increased its price target on the stock from 170.0p to 235.0p.
Deutsche Bank downgraded Direct Line to ‘hold’ from ‘buy’ on Friday, cutting the price target to 340.0p from 350.0p as it said the first half was strong but catalysts for further re-rating “remain elusive”.
The bank said Direct Line’s first-half results showed higher-than-expected reserve releases and signs of stabilising motor insurance prices, which together have helped to improve confidence around future earnings estimates.
“Despite this, after the modest subsequent rally in the shares, we believe the evidence the market needs to re-rate the shares further is either still unclear or at least six to 12 months away,” DB said.
“Though this does still leave upside potential in the shares, we see similar or better value elsewhere in the UK insurance sector. And with further positive catalysts over the next six months likely to remain elusive, we downgrade our recommendation to hold.”
Analysts at Liberum lowered their target price on shares of National Express in anticipation of a more gradual earnings recovery through to 2023.
In particular, Liberum believes that some caution was required due to the competitive pressures in the group’s long-distance coach segment
However, the analysts said they remained “confident” that public transport activity will rebound fully as soon as the Covid-19 pandemic eases.
Liberum also, which also thinks the company is well-positioned to benefit from long-term industry growth on the back of decarbonisation, lowered its target price on the stock from 340.0p to 310.0p, but kept its recommendation at ‘buy’.
