Newspaper article The Evening Standard (London, England)

Goldman's Backing Gives Oil Giants a Christmas Boost

Newspaper article The Evening Standard (London, England)

Goldman's Backing Gives Oil Giants a Christmas Boost

Article excerpt

Byline: Rosamund Urwin MARKET ROUND-UP

CHRISTMAS came early for Britain's oil giants today, as they received a vote of confidence from Goldman Sachs.

BP was the biggest winner among top stocks, 51/4p higher at 5791/2p, after the City big-hitter upped its rating on the energy titan's shares to buy.

Goldman says that BP will be the "clear winner" next year thanks to its restrained spending and strong cash flow.

The bank's energy experts also say BG and Royal Dutch Shell are the standout companies in the sector and that they look far more appealing than their foreign rivals, Total, ENI and Repsol. They rate Shell as a "conviction buy" and BG as a buy thanks to their ability to increase production next year.

Shell added 10p to 1739p and BG gained 61/2p to 1092p.

Despite the strong showing from the oil majors, shares in London were broadly unchanged, with the FTSE 100 up just 0.03 points to 5217.64.

But Lloyds Banking Group was the biggest faller in the top flight despite its shares being named a strong buy by an influential broker.

Exane BNP Paribas says Lloyds may have paid a hefty price for its acquisition of HBOS, but that the bank could start to reap the rewards from the deal next year. Their banking guru Ian Gordon has upgraded Lloyds's shares from neutral to outperform, arguing that 2010 will be a year of delivery as cost-savings overtake spending on the acquisition.

Meanhwhile, chief executive Eric Daniels will turn 60 next year, and Gordon reckons that once the shares have started to recover he may prepare his departure from the bank.

Gordon also believes the market is too fearful about the Basel Committee's proposals on banking regulation and this has left the shares looking cheap.

But investors were unconvinced, and the shares plunged 21/4p to 483/4p to a five-month low.

Despite predicting that the bank will remain loss-making until 2011 and pay no dividend until 2012, BNP now rates the shares as a strong buy.

Elsewhere, Cazenove was feeling remarkably optimistic about the UK economy today, arguing that there has been a broad improvement in economic conditions in recent weeks, casting fresh doubts over the miserable output figures in the third quarter. …

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