Market Report: City bets on bullish update from Reuters group

Click to follow
The Independent Online

Reuters will issue an update on the progress of its business next week and there is a growing conviction among City punters that it will be a bullish affair.

Reuters will issue an update on the progress of its business next week and there is a growing conviction among City punters that it will be a bullish affair.

Some believe that Reuters, up 8.5p to 426p, may even indicate that things are going so well at the information provider that it is trading above analysts' expectations.

Certainly the fact that Morgan Stanley raised its earnings forecasts for the company yesterday, in advance of Wednesday's update, bodes well. There was also a very positive piece of research from Credit Suisse First Boston on Reuters this week. The Swiss broker believes that next week's statement will see the group boast that it continues to make market-share gains. This is likely to have been driven by the launch of Reuters' Trader product in September.

Meanwhile, market conditions also appear to be getting increasingly favourable for the company. It recently emerged that the number of London Stock Exchange terminals used by financial services professionals rose to 83,000 in February, up from 82,000 in December. This is the second consecutive increase in three years and shows that demand for the exchange's financial information, which is then resold by the likes of Reuters, is growing.

Elsewhere, Hanson rose 8p to 508p amid evidence that the US is moving closer to a law which will put an end to asbestos liability claims by setting up a $140bn (£74bn)fund to compensate victims. Such a development would be great news for Hanson as a number of its US subsidiaries are at present under attack from asbestos-related lawsuits. These are believed to have climbed to more than 130,000, leaving the company facing a potential liability of £220m.

The excitement surrounding Hanson stock was also caused by talk that next week's annual meeting is likely to be accompanied by a bullish trading statement. Recent comments from a rival, Rinker, showed that the building materials market in the US (where Hanson has significant exposure) is buoyant.

Marconi dropped 6.5p to 535.5p after a profits warning from its US rival Foundry Networks.

Kingston Communications dropped 2.5p to 68.25p on rumours that Kohlberg Kravis Roberts is looking to reduce its 25 per cent shareholding in the telecoms group. The US private equity house took the stake last year after selling its Omnetica business to Kingston for £169m. Elsewhere in the sector, Colt Telecom fell 0.75p to 52.75p as Credit Suisse First Boston played down recent rumours of a bid for the company.

The Swiss broker believes Colt's stock market valuation is far too rich for any potential predators. According to CSFB, BT or France Telecom are the most likely buyers of Colt, but it also warns that the duo would face major regulatory obstacles if they were to attempt such a move. Davis Services gained 5p to 450p as Deutsche Bank become the second broker in as many days to suggested that the laundry group is vulnerable to a private equity bid.

The lure of the company to a financial buyer lies in its impressive cash flows, according to the broker. Davis has been in the spotlight since a private equity house pounced on Denmark's ISS, a similar business to Davis.

Regent Inns added 2.5p to 84p on whispers that the turnaround at the pubs group, being implemented by its new chief executive, Bob Ivell, is running ahead of expectations. Speedy Hire improved 8.5p to 667.5p as brokers talked of record trading across the group. The tool-hire specialist is said to have made further market-share gains.

Vague takeover rumours pushed MFI 1.25p higher to 120p. Elevation Events added 1p to 13p after announcing a double acquisition. The events management company paid a total £6.8m for two businesses, a deal which increased its turnover fivefold. Ultimate Leisure dropped 19.5p to 294p after Tim Wynn, an executive at the bars group, sold 100,000 shares at 308p.

There was also a sizeable director shares sale at Bond International. The news sent shares in the software group 9.5p higher to 107.5p. Steve Russell, Bond's chief executive, disposed of 1 million shares at 95p to "satisfy demand for the stock from a number of institutional investors".

Finally, Optimisa rose 5p to a fresh high for the year of 450p as brokers digested Tuesday's £1.8m acquisition of the market research specialist, KAE.

There is growing expectation in the Citythat Optimisa will be in a position to pay a dividend this year, which is great going, given the company started the week as a cash shell. Shareholders can also expect further acquisitions at the group in the coming months.

Comments