Sage and Johnson Matthey featured as the top performers in the FTSE 100 yesterday and although they are very different companies, both benefited from bullish news from peers across the Atlantic.
Sage jumped 7p to 181.5p after the US software giant Microsoft posted a 17 per cent rise in third quarter sales and indicated that the corporate software market across America is recovering steadily.
And, according to Dresdner Kleinwort Wasserstein, the figures from Microsoft also allay fears that Sage is losing market share in the US. "Microsoft results confirm that Sage remains competitive in the US," said the broker, noting that Microsoft, like Sage, showed stronger growth in Europe than in the US. Such a trend, says Dresdner, shows that Sage's relatively weak performance in America is due to the market rather than competitive weakness.
Johnson Matthey gained 26p to 922p in response to forecast-busting results from its speciality chemicals peer Engelhard Corp. The company also told Wall Street to expect rising auto-catalytic profits in 2004. Engelhard and Johnson Matthey dominate the market for automotive catalysts, and brokers yesterday suggested that if Engelhard is doing well it is unlikely that Johnson Matthey is missing out. Among them was Deutsche Bank, which argued that market forecasts for earnings at the UK group may be too conservative.
Allied Domecq was not so lucky. It dropped 10.75p to 455.25p as Merrill Lynch downed its recommendation to "hold" from "buy" in the wake of this week's interim results from the drinks giant. "Two weeks ago we maintained our 'buy' rating in the expectation that strong first half trading results would prompt earnings upgrades. Whilst the results were exactly in line with expectation, this was not enough to prompt upgrades, and thus we are moving our recommendation," the broker told investors.
In the tobacco sector, Gallaher dropped 17p to 673.5p on the back of a downgrade from Deutsche Bank. The German broker cut its rating to "hold" from "buy" on valuation. Imperial Tobacco retreated 17p to 1,269p ahead of interim results next week. Analysts expect earnings before interest, tax, depreciation and amortisation to rise by 12 per cent to £556m.
Punters piled into Chemring, up 9p to 451p, on talk that the defence group is being stalked by a US player. If you believe yesterday's gossip, this American company is looking at taking a substantial stake in Chemring and may be tempted to table an outright bid for the group.
Eurodis Electron, the semiconductor distributor, gained 0.75p to 6.62p as a large institutional seller was cleared from the market by brokers. The seller order is believed to have been for 55.5 million shares, which crossed the market at 5.75p. Highland Gold was pegged at 282.5p despite the sale of 250,000 shares at 277p by its non-executive director James Cross. Highland was among the first UK companies to see the potential of gold mining in Russia and has done very well out of it.
Word has it things are going well at Harrier Group. Unchanged at 26p, gossips hear that the software group is trading profitably as business has experienced a strong upturn over the past four months. James Fisher put on 3.5p to 310p on rumours of a major contract win for the marine services group in the near future.
Lower down the pecking order, Densitron Technologies added 1.75p to 16p after the displays specialist announced it is no longer in breach of its banking covenants, thanks to a recent rights issue. Datacash added 2.75p to 85.75p despite the sale of one million shares at 75p by Gavin Breeze, an executive at the payment processing group. Jane Reedy, a follow director, disposed of a more modest 135,000 shares at the same price.
Richmond Foods put on 4.5p to 503.5p as Numis Securities returned from a visit to the cake maker in a bullish mood. Numis reported that Richmond is making good progress with its three-year investment programme, which the broker believes will not only broaden the company's range of products but also help to lower costs. Hitachi Capital rose 12p to 210p after the company held well-received meetings with institutional investors. The meetings follow Thursday's full year figures from the credit finance group. These showed that profits had risen 4 per cent in the year to March 2004 and were accompanied by an upbeat outlook statement.
Finally, Evolution Beeson Gregory tipped Biotrace International, steady at 125p, to be a strong performer in the months ahead. It drew attention to a new report into the industrial microbiology market, for which Biotrace makes testing equipment. The report forecasts the market to grow at 11 per cent per annum. In 1998, more than 855 million tests were performed worldwide. This has increased to 1.1 billion presently and is set to hit 1.5 billion by 2008, which would make it worth nearly $5bn, according to the report by Strategic Consulting.Reuse content