Market Report: BT Vision launch piles pressure on BSkyB

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Analysts are just beginning to digest the potential impact of BT Group's Vision launch on Monday and some are already predicting a much tougher time for BSkyB. Although BSkyB shares nudged slightly firmer in yesterday's buoyant market, the US investment bank Citigroup thinks now might be a good time to ditch shares in the UK's largest satellite broadcaster.

Citigroup said: "BT Vision's launch presents a more compelling product than we had expected. BSkyB is in a fast-changing market and, as a result, earnings visibility is low. Going forward, we expect continued pressure on gross margins and therefore we feel that the risk reward on the stock is poor." The broker set a new price target of 500p for the shares and downgraded its recommendation to "sell". BSkyB shares closed 2p firmer at 522p, while BT Group added a penny to 290.75p.

Integrated oil stocks have been best avoided over the past few months. BP's share-price performance has been abysmal, falling almost 13 per cent since the start of August against a 4.1 per cent rise in the FTSE 100 index over the same period. Shell has fallen 5 per cent since the start of August, but its shares got a boost yesterday as broker ABN Amro upgraded the stock to "buy" and upped its target price to 2,150p. BP climbed 10.5p to 578p while Shell added 36p to 1,825p.

The stories surrounding corporate activity in the insurance and life sectors will not go away, but the story in the market changes almost daily. It appears to be that some sort of deal making is going on and that going short of any stock in the sector is a highly risky move. Yesterday, the talk was that banking giant HSBC, 14p worse at 923p after an uninspiring third quarter trading statement, is lining up a bid for Prudential, 4.5p firmer at 666p.

Icap, the interdealer broker, took advantage of its recent share price weakness to buy back 2 million shares for cancellation on Monday. The broker Shore Capital upped its stance from "hold" to "buy" as the shares climbed 16.75p to close at 462p.

In the wider market, speculation about a rate rise in Japan boosted mining issues, while continued corporate activity speculation across the market encouraged buyers. The FTSE 100 closed 36 better at 6086.4.

A bearish note on Henderson Group from Altium Securities went ignored as buyers sent its shares to an all-time high, 6.75p better at 127.75p. Altium believes that once the group's cash reserves are stripped out it becomes an unattractive takeover target and the broker reiterated its "sell" advice with a 100p target. However, the investment management group later upped its guidance after intervention by Australian authorities and Credit Suisse reiterated its "overweight" stance.

It has been a bleak autumn for Carphone Warehouse investors as one larger competitor after another has moved into the home broadband space. However, there was better news yesterday as the company said Christmas sales were ahead of forecasts and that it will continue to service Vodafone customers. Its shares were also boosted by a reiterated "buy" recommendation from Merrill Lynch, with a 390p per share price target. The stock closed among the top performers in the FTSE 250, 20.75p better at 291.75p.

There was no hiding place for any investor still holding on to shares in Evolutec. After tanking on Monday after disastrous news on the company's hay fever treatment, its shares fell 28.4 per cent to 26.5p, down 10.5p. Morgan Stanley placed 4 million shares at between 22p and 24p early in the session and Edison, an independent equity research group, told clients that Monday's falls were overdone.

Pacific Media was also heading in the wrong direction, down 4.5p to 16.5p, as the group confirmed it will move from the main market to AIM this month. The wholesale retail group will issue 54.5 million new shares at 16p per share as part of the move.

Shares in Renesola, the AIM-listed Chinese solar wafer maker, continue to defy gravity. Having listed at 79p in August, Renesola closed 106p firmer at 394p yesterday, giving anyone lucky enough to have got in at the IPO a cracking 340 per cent gain.

Finally, BrainJuicer enjoyed a very strong first day of trading on AIM. The online market research group listed after a placing by the broker Teather & Greenwood, raising £1.4m at 108p per share. The placing was four times subscribed, and buyers pushed the shares to a juicy 136.5p by the close, a 26.4 per cent premium.

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