Nov 26 (Reuters) - RBS upgraded oil and gas companies StatoilHydro ASA, Eni SpA and Repsol to 'buy' from 'hold' and said it sees significant upside potential in oil stocks.
RBS expected profitability for European oil stocks to be well above mid-cycle levels in the fourth quarter, despite the current operating environment being much tougher than it was earlier this year.
The worst financial crisis since the Great Depression has crippled liquidity in commodities and energy markets and the subsequent plunge in trading volumes has forced many brokers and traders to hunt for new revenue streams or wind down operations.
The brokerage, however, cut its price targets on several stocks in the sector to account for revisions to oil price and currency assumptions.
'We expect an average quarter-over-quarter decline in earnings of 38 percent in U.S. dollars and 27 percent in euros in the fourth quarter,' RBS said.
The brokerage cut its fourth-quarter London Brent crude forecast to $60 per barrel from $100, and 2009 forecast to $80 per barrel from $100.
Following are the price target changes made by RBS on the European oil companies:
COMPANY PRICE TARGET
New Old
BP Plc 550 pence 560 pence
ENI SpA 21.90 euros 22.50 euros
OMV 45 euros 46.30 euros
Repsol YPF 22.30 euros 26.50 euros
Royal Dutch Shell Plc 2240 pence 2340 pence
StatoilHydro 165 Nok* 172 Nok
Total SA 59 euros 61.50 euros
* Norwegian crowns
(Reporting by Ramya Dilip in Bangalore; Editing by Pratish Narayanan) Keywords: OIL/RESEARCH RBS (ramya.dilip@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging ramya.dilip.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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