Broker tips: Old Mutual, Salamander, Carillion

15th Apr 2011 12:34

The target price for Old Mutual has been raised from 174p to 178p by UBS now that with the US life assurance unit sale is complete."We believe that this results in a more focused life insurance group and de-risks the business significantly with respect to corporate credit risk," said analyst Michael Christelis.The broker adjusts its valuation model for the sales, resulting in its 2011 embedded value (EV) estimate rising by £330m (£214m from the sale and removal of -£116m EV forecast for the business).A 'buy' rating is kept.Broker finnCap reduces its forecasts at oil firm Salamander Energy after drilling at one of its wells in Thailand didn't work out. "The failure of Dao Ruang-2 to flow at commercial rates is a clear blow for Salamander and will hit sentiment in the stock, which had been rising during recent months," said analyst Will Amstein.As a result, the broker cuts its net asset value estimates by 7.8p per share to 368p per share to account for the lower remaining potential from the well.Despite the weakness in the shares in the short term, the broker keeps its 'buy' rating and sticks with a target price of 368p.Shares in contractor and support services specialist Carillion have been overlooked, according to RBS who raises its target price slightly and keeps its 'buy' recommendation."We feel Carillion's shares have been somewhat overlooked, partly because of a lack of will in some quarters to understand the Eaga deal and partly because of the good run they have had so far this year," said the broker.While pre-tax profit beat expectations in 2010, RBS highlights the company's outlook which said that, despite the tough UK markets, the business should make further progress in 2011.The target price is upped to 457p, from 446p.