IEC Looks a prime buyout target at current price.

I see that Panmure Gordon have issued a 'Buy' note showing profit as early as 2006. This is an encouraging sign IMO. If they can make profit in 2006, then 2007 and 2008 could be very good indeed.

Date:21-12-05, Broker:Panmure Gordon, Recommend:Buy,
2005 Profit:-£3.20m, EPS:-9.45p, 2006 Profit: £3.52m, EPS:8.94p

Panmure, having only just initiated coverage, have decided upon a very conservative (IMO) target price of 530p.

However, they go on to say that "...a higher value based on cash and $2.5/boe is justified at this stage and that there is further upside in the stock once production begins in 2006. ......"

'At this stage' with 228mbls I make that approx. 900p (including cash).

They also go on to say, under the heading 'Upside', that once production starts, a higher value of closer to $3-4 of oil in the ground should be created (like the Gazprom-Sibneft deal). "This should drive the price to 3-4 times current value" they say.

The earnings forecast for 2007 is Sales £118m, Profit £25m, EPS 55.8p

I would like to add a word of caution here:

I believe IEC are working on a 'net back' arrangement with the Russian government. If my figures and understanding are correct, T/O of £118m would result in profit in the region of £20m and EPS of 42p.

Either way, I would still be over the moon if we hit these figures for 2007.

As with all forecasts, it's just one man's view but it certainly looks encouraging and it's great to see a new analyst instigating coverage.