Broker Views: The European E&P sector

Deutsche Bank has upgraded its recommendation on Cairn Energy (LON:CNE) to buy (from hold) after reviewing its development portfolio and believing the company has potential to outperform market expectations.

Deutsche highlighted Cairn’s opportunity to de-risk its Senegal SNE discovery, the company’s robust balance sheet and an option on the Cairn India tax arbitration as offering “investors several potential catalysts for valuation growth this year”.

– Target increased to 275 pence from 270 pence –

Conversely, the City heavyweight has downgraded Premier Oil (LON:PMO) to hold (from buy), with catalysts failing to excite analyst David Mirzai.

He said: “Our Buy case for Premier has been based on positive tailwinds coming from bringing Solan onstream and completing its refinancing.

“It’s been a volatile 6M, but the catalysts are in and we are somewhat underwhelmed.”

– Target left unchanged at 90 pence –

At 2:12pm:

(LON:CNE) Cairn Energy PLC share price was +11.8p at 242.6p

(LON:PMO) Premier Oil PLC share price was -4.87p at 79.88p

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