Lehman Brothers have lifted the price target for Hungarian fuels group MOL by 2% to Ft 24,000 and also raised earnings per share estimates for 2006 by 4% to reflect strong Q2 results. “MOL's exceptional downstream performance, up 54% year on year, stands out among the other European companies and indicates to us that the group is finally realising higher refining margins," Lehman said in a Global Equity Research dated 9 August. After three consecutive quarters of falling earnings (on an adjusted basis) this is a strong set of results, particularly when compared to Neste Oil which reported flat profitability in the downstream business, Lehman added. “MOL stands on 6.2x 2007F EV:EBIDA, a 37% discount to Neste and offers a premium RoACE for this year," Lehman added, giving a 2-Equal weight rating on the stock. “Following three quarters of declines in CCS earnings, it is encouraging that MOL appears to have captured the higher indicator margins, in the downstream at least," Lehman said, while adjusting their reported Ft 102 billion operating profit downwards for Ft 14.6 billion of inventory gains. Lehman have also lifted EPS estimates for 2006 by 4% “to reflect the stronger than expected results and a slight increase in the premium to the NWE refining margin that we expect the company to earn for this year." (Portfolio)
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