More than 100% upside potential - Buy recommendations for BASF, Evotec and Saturn Oil + Gas

Saturn Oil & Gas: Shareholders can look forward to free cash flow

Saturn Oil & Gas is valued at a significant discount to the peer group. Based on the figures expected for 2024, the enterprise value compared to the discounted cash flow is 1.7, with an impressive free cash flow yield of 50%. In comparison, the peer group has values of 2.4% and 5.1%, respectively. The current year's free cash flow will still be used for debt repayment. Starting from 2025, it will be available to shareholders. Analysts expect the market to recognize this as the year progresses.

In addition to the already high turnover and income from the sale of the oil and gas produced, Saturn Oil & Gas also has new potential. For example, the first wells in the Bakken project have turned out to be very promising. The Viewfield 01-07 well revealed a potential of 233 barrels per day. This was significantly higher than the forecast 165 barrels per day.

Overall, the valuation of Saturn Oil & Gas has significantly diverged from that of similarly sized oil producers. Therefore, it is an attractive time to buy the share. Echelon recommends Saturn shares as a "Buy" with a price target of CAD 5.65. The share is currently trading at around CAD 2.24.

BASF: Price targets diverge

This week alone, three analyst firms have commented on BASF shares. Their opinions differ widely. DZ Bank does not see any massive impact from the profit warning for 2023. The analysts expect a dividend at the previous year's level, putting the dividend yield at around 8% and providing downside protection for the share price. Nevertheless, they are reducing the price target from EUR 49 to EUR 46 and continue to rate BASF shares as a "Hold". Given the current price level of EUR 43.50, Warburg Research sees no potential for the chemical company's shares. The preliminary figures were disappointing for the time being. For a final assessment, the analysts want more details.

UBS is one of the BASF bulls. Their analysts recommend buying the stock with a target price of EUR 59. Although EBIT for 2023 is disappointing, the free cash flow is strong. In the analyst's view, BASF's business development should have bottomed out in the fourth quarter of 2023. They now expect a gradual increase in profits.

Evotec: Countermovement underway?

Positive analyst commentary has triggered a countermovement in Evotec this week. Following a conference call of the biotech company on Monday afternoon, RBC commented positively. The analysts welcomed the precise words and detailed presentation by Supervisory Board member Iris Löw-Friedrich. It was made clear that Evotec had complied with all legal requirements in Germany and the US in connection with the outgoing CEO's late-reported share sales in 2020 and 2021. For the analysts, the case is now closed, and investors can now focus again on the Company's business development. They rate the Evotec share as "Outperform", with a target price of EUR 18.60. After falling to EUR 14.18 the previous week, the Evotec share is trading above EUR 15 again.

Whether the turnaround has been initiated for Evotec remains to be seen. The loss of trust should not be underestimated in any case. Sooner or later, however, the focus should return to the operating performance, which was not the reason for the share price slide in recent weeks. Saturn Oil & Gas is facing an exciting year. Even today, the valuation of the share is anything but high. If the debt reduction is implemented as announced and there are no nasty surprises in the oil price, it should be possible to convince new investors as the year progresses. At BASF**, the dividend yield is attractive, but higher profits are needed in order to distribute them sustainably and invest in the future.