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The 2015 All-Europe Research Team: Oil & Gas Exploration & Production, No. 1: Martinus (Martijn) Rats & team
Morgan Stanley rockets from runner-up all the way to first place.
Total Appearances: 9
Team Debut: 2006
Morgan Stanley, which debuted on this roster in 2006 and had not previously ranked higher than third, rockets from runner-up all the way to first place. Working out of London, crew chiefMartinus (Martijn) Ratsand his colleagues report on 27 names in this sector plus 14 regional oil field services operators, providing “the most thorough coverage in the City,” as one fund manager attests. Rats, 42, also impresses investors as “intelligent and clear thinking,” in the words of one fan. Investors single out for praise the team’s September 2013 downgrade of Austrian oil refiner OMV. Rising capital expenditures were resulting in negative free cash flow, the analysts noted, and they reduced their rating on the stock from equal weight to underweight. OMV has subsequently underperformed its regional peers, tumbling 36.6 percent, to €22.08, by the end of January and lagging the sector by 29.8 percentage points. On the group overall, Morgan Stanley’s researchers are broadly cautious, largely because of low oil prices. The shares declined by 7.2 percent during the 12-month period through January, while Europe’s broad market advanced 8 percent. But they do favor the major integrated players, thanks to their relatively high dividend yields. A top pick on this theme is Royal Dutch Shell. The Anglo-Dutch multinational provider enjoys a strong free cash flow and robust balance sheet, Rats and his crew advise. At 2,450p, their target price for Royal Dutch Shell represents a 21.4 percent premium to the stock’s value at the end of last month. “Their dividend analysis is pure genius,” proclaims another backer, “and their industry knowledge unparalleled.