Broker snap: UBS ups target for Cairn

LONDON (ShareCast) - UBS (NYSEArca: DJCI - news) has raised its target price for oil and gas giant Cairn Energy (LSE: CNE.L - news) after the shares went ex-dividend yesterday with a share consolidation. Following the $5.5bn sale of a large stake in its Indian business to Vedanta Resources (EUREX: VR9F.EX - news) , Cairn last month gave details of the $3.5bn cash return to shareholders. The group said it would give 160p per share and announced a 13-for-33 share consolidation in order to make the market price of the stock comparable before and after the payout. "On Monday 6th February, Cairn Energy shares went ex-div of 160p/sh, or 403p/sh (post consolidation) with a 33/13 share consolidation. We are therefore adjusting our price target to reflect this," UBS said. The target price has been upped from 291p to 370p. The broker also said that it is "more comfortable with the story" after its meeting with Cairn's management last week, and has subsequently cut the discount to net asset value that it previously used to set its price targets. "Despite this, we do not see yet a compelling Buy case with unknowns on timing of announcement (i.e. could take an indefinite period for Cairn to go ahead with a deal), political/asset risks, and once the deal is announced, the time taken to actually close the deal," analysts said. UBS maintains a neutral rating on the stock. BC