We know brokers tend to be generous with regards to the company’s that they represent, but it’s pretty rare to see a broker be this generous.
Mention of a ‘cash machine’, a ‘re-rate’, ‘ignored by the market’ and a 483% upside made us think that finnCap think there is something pretty special about Savannah Energy. Else they’d look rather foolish!
What’s interesting about Savvanah is that it appears to be bouncing off at an all-time low, but finnCap feels there is little danger in trying to catch the metaphorical ‘falling knife’ here:
Savannah’s acquisition of a key strategic Nigerian gas asset with strong growth potential has been ignored by the market. Its significant exploration success in Niger has also gone unrewarded. Delivery of the strong free cash flow potential these assets offer will re-rate the shares, which are materially undervalued. Management’s tenacity in getting the Seven Energy acquisition across the line alongside the impressive early progress with the acquired assets should give investors confidence. We initiate with a Buy rating and risked-NAV based price target of 49p/sh.finncap
Highlighting its prospects, it added that Savannah is now the ‘proud owner’ of an integrated, strategically important Nigerian gas business in one of the best oil and gas regions across the world.
The share price of Savvanah Energy (LON: SAVE) is currently at 9.62p.
One to watch as finnCap has put a target price of 49p on it.