Newspaper article The Evening Standard (London, England)

BG Stages Fightback as Brokers Agree to Differ

Newspaper article The Evening Standard (London, England)

BG Stages Fightback as Brokers Agree to Differ

Article excerpt


BG GROUP rallied 55p to 1286p today following the shares sell-offyesterday that greeted record first-quarter profits.

Judging by today's comments, brokers are unable to agree on prospects for theoil and gas explorer, which has been tipped in the past as a bid target for BP,4p dearer at 615p, or Shell, 8p better at 2023p.

BG slumped 6% yesterday despite reporting a 70% rise in operating profits to[pounds sterling]1.4 billion. But the company also announced the proposed acquisition of OriginEnergy, Australia's secondbiggest gas and electricity supplier, for [pounds sterling]6.1billion. Citigroup suggests the terms of the bid may be too generous, andappear to have caused "equity investor unease".

It continues to rate the shares a sell although it has raised its target pricefrom 1000p to 1100p to reflect the firstquarter results, which came in 22%above its own forecast.

Credit Suisse has none of these reservations about BG. It has jacked up itstarget from 1385p to 1415p and repeated its outperform rating. It says: "If thedeal gets done at Origin's current share price, it will likely prove accretiveto BG's longer-term global gas strategy." Shares generally traded in a narrowrange, hamstrung by the fact that much of Europe and the Far East is closedtoday for May Day celebrations. Not even a quarter-point cut in US interestrates to 2% was enough to inject any goodwill into the market place. All eyesare now focused on tomorrow's US non-farm payroll numbers. But the

FTSE 100 index managed to claw back an opening fall to be up 21.1 at 6108.4.

The turnaround hinged once again on the mining companies with Kazakhmysclimbing 101p to 1683p, Anglo American 161p to 3430p and Xstrata 170p to 4116p.Chilean copper miner Antofagasta rose 20p to 822 1 / 2 p despite Deutsche Banktrimming its target from 766p to 755p, claiming it sees the company's marginscoming under increasing pressure as costs continue to grow. …

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