Market Report: Bears maul NETeller amid competition concerns

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Bear Raiders honed in on NETeller yesterday, bringing an abrupt end to the stock's amazing performance since its float almost a year ago. Shares in the company, which operates an e-wallet that funnels money from online gamblers to betting and casino sites, had soared from an issue price of 200p to an all-time high of 757.5p this month.

Bear Raiders honed in on NETeller yesterday, bringing an abrupt end to the stock's amazing performance since its float almost a year ago. Shares in the company, which operates an e-wallet that funnels money from online gamblers to betting and casino sites, had soared from an issue price of 200p to an all-time high of 757.5p this month.

But the stock dropped 22.5p to 673.5p yesterday as bears dug their claws into the shares. They took the view that NETeller has got ahead of itself and that the group is bound to encounter intense competition in the coming years as other players enter the market. Bears reckoned the e-wallet business will eventually become a commodity industry.

However, those short of NETeller should beware. Canaccord Capital believes there is plenty more upside in the group's share price. In fact, the broker has a price target of 750p on the stock and was particularly impressed with NETeller's recent £6m acquisition of Quick Access, which takes into the lucrative Asian market.

Pursuit Dynamics is another "blue sky" stock, which offers investors untold riches if it can put into practice its technology. Its shares jumped 24p to 211p as Investec Securities urged clients to pile into group. The broker described it as "one of the most tantalising investment opportunities that we have come across in recent years".

The company says it has a unique brand of technology for the food and drinks industry and Investec believes that if the company is able to deliver on its promises its shares will, in the broker's words, "be worth considerably more than their current valuation".

The next 12 months are crucial for Pursuit. After more than fours years of research and development, the group's first commercial product was launched in January. Investec hopes Pursuitwill announce the first commercial orders within the next quarter or two.

Meanwhile, the FTSE 100slumped 62.6 points to 4,937.6, after a profit warning from General Motors in the US hit sentiment towards equities. A rise in the oil price to a new high - despite Opec's decision to increase output - only made matters worse for stocks.

Centrica gave up 5p to 227p after Credit Suisse First Boston slashed its rating on the utility to "underperform" from "neutral". With gas prices remaining resiliently high, CSFB argued that the next couple of years will not be easy for Centrica.

BSkyB bucked the negative trend, to close 3p better at 572p, thanks to UBS, which named the satellite broadcaster as one of its top picks in the media sector. Woolworths added 2.75p to 50.75p as Deutsche Bank raised its stake in the toys and sweets retailer to 11.1 per cent from 10.4 per cent. Traders expect Apax Partners to return with an offer of 55p a share for the group before the end of the week. Reports suggest the private equity firm has already entered into negotiations with Woolworths' management with the aim of securing their support for a takeover.

Cookson improved 0.25p to 39.25p as Deutsche Bank turned buyer of the engineer after its full-year results on Tuesday. "We are upgrading our rating on Cookson because the shares look materially cheap versus the UK sector," Deutsche said. It believes the stock should trade closer to 45p. JD Wetherspoon lost 1.75p to 253.25p after Suzanne Baker, the commercial director at the pubs group, sold 16,000 shares at 254.25p.

European Colour ticked 0.25p higher to 15.25p after it emerged that Peter Gyllenhammar, the value investor, had upped his shareholding in the chemicals group to 13.6 per cent. Word has it he was active in the market and added to his stake yesterday. JKX Oil & Gas rose 3p to 151.5p after unveiling a doubling in full-year profits and boasting that it had entered the exploration game in Bulgaria.

Mears rose 4.5p to 249.5p on hopes next week's results from the council-house maintenance specialist will beat City forecasts. Urbium added 4p to 770p on rumours of strong trading at the late-night bars group. Urbium's Tiger Tiger chain is said to be performing particularly well.

Finally, brokers were surprised to see another day of falls for Cambrian Oil & Gas, off 1p to 6.75p. The Kyrgyz Republic focused explorer is now valued at just £7m. And yet, unlike most AIM-listed rivals, it owns 70 producing oil wells which are tipped to enjoy a significant rise in output once the Soviet-era equipment used to operate them has been upgraded. Cambrian Oil & Gas also controls one of the biggest oil prospects in the Kyrgyz Republic. If the group's drilling programme proves to be successful investors can expect significant upside in the stock.

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