Citi initiates coverage of Safestore with a “buy” rating. It forecasts that the self-storage company will provide investors with a three-year earnings compound annual growth rate of 15 per cent, and sees further potential for an earnings boost from its conversion to a real estate investment trust. Citi sets a 185p target price for the shares – a 20 per cent discount to its forecast for net asset value in two years’ time due to concerns over asset valuations.
Morgan Stanley double downgrades Britvic to “underweight” from “overweight”, slashing its price target by 25 per cent to 380p, citing uncertainty over input costs, which it says are likely to offset any cost savings. It says its lack of pricing power and hedging potential to offset the impact of this on earnings surprised it. Notes shares currently trade on a price to earnings ratio of 11.4 times 2011 forecasts, a 20 per cent discount to peers.
Nomura initiates coverage of Dragon Oil with a “buy” rating and a 755p price target. Says its growth potential is built around Turkmenistan, making it stand out from rivals. Also highlights its large net cash position which it says gives it “financial flexibility” to develop a new production province via an acqusition. “The business is well positioned to build a legacy position for the long term, possibly unique among its peers,” Nomura says.