One to watch: Eastern promise

JKX Oil & Gas292.8p -2.7pScotsman says HOLD

DESPITE a strong underlying business, macro factors can still impact individual stock performance. In our view, JKX Oil & Gas suffered over the past two years as relations between Russia and Ukraine became increasingly fractious. Much has changed in Ukraine since gas was prevented from flowing from Russia to key European markets in early 2009. The Ukrainian presidential elections this year were won by Viktor Yanukovych, removing the pro-European incumbent Viktor Yushchenko and leading to improved relations with Moscow. We therefore anticipate less alarming developments between the countries and fewer headlines in 2010.

The decline in European gas demand as a result of the economic slowdown has also made Ukraine a more important customer for Gazprom, as well as a key gas transit state. Ukraine also needs the gas, importing about 70 per cent of its needs from a combination of Russia and Central Asia. This improving macro backdrop should help the investment case for JKX as a Ukraine- and increasingly Russia-focused FTSE-250 E&P company.

Historically, JKX's activity levels have been steady rather than stellar, but following the 38 million placing completed in January, things are set to change. It will accelerate its activities on its key gas assets in Ukraine. In Russia, the company wants to build on the initial success of its Koshekhablskoye gas-field workover campaign and complete appraisal drilling on the reservoir beneath.

Despite the unfashionable geography, we would stick with JKX to take advantage of the continued valuation discount and increased activity levels.

Investment markets and conditions can change rapidly and, as such, the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a guide to the future.

Lloyds Banking Group

55.55p -1.82p

Broker says HOLD

ANALYSTS at Matrix reckon Lloyds' recent full-year results "put a damper on the nascent bull story". The broker said this year's first-half earnings should be "much better" than the latter half of 2009, but added that an "overriding concern is that Lloyds will be considered poorly capitalised under Basel III (rules]".

Savills

359.9p -8.2p

Broker says HOLD

"HOLD" is the new investment advice from Numis after yesterday's full-year results from upmarket property firm Savills. The broker, which previously had a "buy" rating on the stock, said: "With the shares now at our 368p price target, which we retain, we move to a 'hold', although see risk on the upside to our forecasts."