Market Report: Amvescap surges on hope for new year figures

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The Independent Online

Morgan Stanley ushered its top clients into Amvescap yesterday, convinced that shares in the fund manager are set to soar after its annual results early next year. Amvescap finished the session as one of the best blue-chip performers, up 15.5p to 436p, after the US broker's recommendation.

"We see the stock breaching the 450p level after February's full-year results presentation and over the next three months should outperform rival Schroders," Morgan Stanley said. In its view, a new strategy will be unveiled by Amvescap alongside its results which will see it focus on operational efficiency, greater cross-selling of products and make a strong commitment to better disclosure and transparency at the company.

The latter should go down particularly well with investors who might want to put cash into the Amvescap funds and those who might want to invest in the company's shares. Last year the company's reputation was badly dented by the New York attorney general Eliot Spitzer's investigation into some of its practices.

There have been some concerns that Amvescap might have to cut its dividend to comply with debt agreements. But Morgan Stanley played down the possibility that February's results will see a fall in the amount paid out to shareholders. "We understand the debt covenants have been modestly tweaked which means there is no risk to the dividend", the broker said.

The FTSE 100 finished the week on a positive note, rising 36.3 points to 5,531.6, as the heavyweight banking and pharmaceuticals sectors staged a solid advance. Royal Bank of Scotland rose 32p to 1,741p, HBOS improved 14p to 962p, while GlaxoSmithKline added 26p to 1,460p and Astra-Zeneca put on 18p to 2,747p.

The future of Pilkington, 4.25p higher to 148.75p was a talking point after the glass maker's board rejected Nippon Sheet Glass' 158p-a-share cash offer for the company late on Thursday. Dresdner Kleinwort Wasserstein downgraded its stance on the stock to "sell" after the news. The broker said: "We see almost no chance of a deal with Nippon, or anyone else, for the foreseeable future and expect the shares to fall to 130p." Dresdner believes that Nippon is financially stretched and cannot afford to pay higher than 158p a share, while the Pilkington board will not contemplate an offer below 170p. Teather & Greenwood disagreed, suggesting there is a good change that the Japanese group, which already has a 20 per cent stake in Pilkington, will eventually win control of it. According to T&G, financing is not a problem for Nippon, which it sees as desperate to do a deal. The broker said: "Apart from Malaysia and Vietnam, Nippon is landlocked in Japan. It needs global reach to continue to address its Japanese motor industry customers and Pilkington offers a perfect route into Europe, North America, South America, Australia and China."

Carphone Warehouse fell 2.75p to 240p on fears that the mobile phone subscription packages it sells are coming under ever- greater competitive pressure from new low-price, pre-paid offers at the supermarket groups Tesco and Aldi. The duo are relatively new entrants to the market, but WestLB warned that should they gain momentum they could start to pose a serious threat to Carphone. Therefore the broker downgraded its recommendation on the retailer to "neutral" from "buy".

EMI gave up 5.75p to 236p as it emerged that Paul McCartney and Ringo Starr, and the families of John Lennon and George Harrison, have sued the record group, claiming they are owned £30m in royalties. Apple, which is owned by McCartney, Starr and the two families, said an audit found EMI had failed to fulfil the terms of a deal between them.

MyTravel extended its recent strong run, gaining a further 3.5p to 208.75p on the back of a "buy" note from Dresdner Kleinwort Wasserstein. The broker applauded Thursday's strong results from the travel group and set a price target of 285p on its shares.

Among the smaller companies, Oxus Gold ticked 1.25p higher to 76.5p despite news that RAB Capital, the hedge fund, had sold 2 million shares leaving it with an 18.4 per cent stake. CeNes Pharmaceuticals gained 0.12p to 7.87p after Alan Goodman, the chairman of the biotech, bought 500,000 shares at 8p.

Pace Micro dropped 4.5p to 52.5p after the set-top box maker warned its annual results will see the company break even at best. Falkland Gold & Minerals dropped 0.5p to 13p after Cambridge Mineral Resources (CMR) said it had sold its 5.7 million shares in the group to RAB Capital at 10p apiece. CMR, off 0.12p to 5.5p, said it will use the cash raised to accelerate development of its gold assets in Colombia.