Derek Pain: Analysts can still cause a stir on the stock market

No Pain, No Gain

City share analysts may no longer command the impact they enjoyed in pre-big bang days but they can still send a share soaring – or plummeting. Of course, like the rest of us, they sometimes make horrible mistakes. It is not unknown for a company that has experienced analytical adulation to shortly afterwards go belly-up. I suppose one of last year's casualties, Connaught, is a sad example of such misplaced faith.

Generally speaking, I am a fan of analysts. Many of these so-called City scribblers have years of experience to back up their predictions and undoubtedly perform extremely well. They are not as high profile as they once were. And the sensational report is now a rarity. The old joke that researchers appear to know more and more about less and less is not really justified, although in some quarters the degree of specialisation does seem excessive.

Analysts come in all shapes and sizes. Most are with the big City groups, but many of the smaller players have some on their books. A development in recent years is the growth of research paid for by the company under the microscope. The major stock market constituents would not dream of forking out for any analytical attention. I suspect they often feel they suffer too much scrutiny anyway, and with their shares actively traded they have no need to pay, as the stockbroker involved, sometimes the company's own City "shop", creates plenty of profitable share dealing from research. But small caps, generating much less investor interest, have no such drawing power, prompting the materialisation of researchers offering paid-for investment reports.

The emergence of ordered research is one example of the ever-moving face of the City. The positioning of analysts has also changed. In my younger days one of the most densely populated areas of the analytical community was brewing and distilling. Then there were more than 70 quoted drink shares and analysts like Colin Mitchell, who was with a stockbroker called Buckmaster & Moore, were City celebrities. From an army of maybe 50 drink analysts, he was voted the top player each year for about a decade. Nowadays the drinks industry is no longer a powerful stock market force following the continuous flow of takeovers. Few analysts now concentrate on drinks alone but are forced into the embrace of the much more wide-ranging leisure industry.

Recently four constituents of the No Pain, No Gain portfolio enjoyed analyst attention. Last week I mentioned the share performance of Lighthouse following comments by a researcher called Brokerlink. Others to get the treatment are Hargreaves Services, Mears and Whitbread.

Hargreaves, with interests ranging over coal, industrial services and transport, hit a peak of 912.5p after the stockbroker Panmure Gordon lifted its target price from 910p to 1,011p. In November the shares were around 680p. PG expects figures, due this month, to be accompanied by encouraging trading news, with winter snows thought to have driven demand for solid fuels. Mears is upgraded by the stockbroker Execution Noble from hold to buy with a 390p projected price, topping an upgrade from rival Investec which settled for 365p. Execution expects profits of £28.8m to have been achieved last year and is looking for £34.8m this year and £38.5m next. It says that in a period when the service sector saw some major casualties (Rok and the aforementioned Connaught), Mears kept a "disciplined bidding approach and continued to grow". The group picked up bits and pieces of the failed duo.

Whitbread, the budget hotel, pub/restaurant and coffee shop chain, was spurred 53p to 1,773p when the powerful investment house of Citi said the shares were undervalued. Whitbread has topped 1,800 in recent times. In the last century it was a leading brewer, and would have been one of the subjects that occupied Colin Mitchell and his rivals. But in the ferment in the old style and largely successful beerage that followed ill-judged government interference, it sold its breweries and pubs and is now regarded as a bastion of the leisure industry.

The portfolio is in the money with this trio. Hargreaves arrived at 417p; Mears at 372p and Whitbread at 1,105p. But despite its Brokerlink-inspired strength it is still sadly out-of-pocket with Lighthouse.

yourmoney@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Travel
travel
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
artCultural relations between Sydney and Melbourne soured by row over milk crate art instillation
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
filmBlue Is The Warmest Colour, Bojack Horseman and Hobbit on the way
Arts and Entertainment
Preparations begin for Edinburgh Festival 2014
Edinburgh festivalAll the best shows to see at Edinburgh this year
News
Two giraffes pictured on Garsfontein Road, Centurion, South Africa.
i100
News
Kenny Ireland, pictured in 2010.
peopleBenidorm, actor was just 68
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
News
i100
Arts and Entertainment
arts + ents
News
Morrissey pictured in 2013
people
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Regulatory Reporting-MI-Bank-Cardiff-£300/day

    £200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Training Programme Manager (Learning and Development)-London

    £28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

    Operations Engineer (Redhat, UNIX, Solaris, Data Centre, Cisco)

    Negotiable: Harrington Starr: Operations Engineer (Redhat, UNIX, Solaris, Data...

    Day In a Page

    Dress the Gaza situation up all you like, but the truth hurts

    Robert Fisk on Gaza conflict

    Dress the situation up all you like, but the truth hurts
    Save the tiger: Tiger, tiger burning less brightly as numbers plummet

    Tiger, tiger burning less brightly

    When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
    5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

    In grandfather's footsteps

    5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
    Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

    Martha Stewart has flying robot

    The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
    Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

    Do women cyclists need 'pootling lanes'?

    Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
    A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

    A tale of two presidents

    George W Bush downs his paintbrush to pen father’s life story
    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

    The dining car makes a comeback

    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
    Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

    Gallery rage

    How are institutions tackling the discomfort of overcrowding this summer?
    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

    Eye on the prize

    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
    Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

    Women's rugby

    Tamara Taylor adds fuel to the ire in quest to land World Cup
    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

    How Samuel Beckett became a French Resistance spy

    As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
    We will remember them: relatives still honour those who fought in the Great War

    We will remember them

    Relatives still honour those who fought in the Great War
    Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

    Kodak's last-ditch bid to keep celluloid alive

    Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices