Latest broker coverage...BA-Merrill Lynch rates OSH as Buy,...

Latest broker coverage...

BA-Merrill Lynch rates OSH as Buy, Medium Risk (1) - The broker notes the 4Q09 operating result puts FY09 headline revenue pretty much bang in-line with expectations, albeit a little shy of consensus. And while 2H operating expenses were a little high, the broker thinks this will be more than offset by lower non-cash items.

Otherwise, Merrills thinks that Oil Search offers "the most compelling and lowest risk valuation" within its coverage universe, making the stock its top pick amongst all Australian large-caps.

The broker values the base business at around $6.40 per share, which includes PNG LNG I&II, but accords zero value to the company's uncommercialised PNG gas portfolio.

Even more compelling for long term investors, says Merrills, is that on just its base business, the portfolio can deliver better than 10% per year valuation accretion over the next several years. Buy Maintained.

Target price is $8.22 Current Price is $5.36 Difference:$2.86 - (brackets indicate current price is over target). If OSH meets the BA-Merrill Lynch target it will return approximately 53% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December. BA-Merrill Lynch forecasts a full year FY09 dividend of 7.53 cents and EPS of 15.18 cents . At the last closing share price the estimated dividend yield is 1.40%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.32.