Market Report: CSR soars on positive bluetooth projections

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The Independent Online

Mr Hodgson is believed to have indicated that the company continues to grow at breakneck speed with little sign of a slowdown or indication that its dominance of the Bluetooth arena is waning. After these comments, Credit Suisse First Boston raised its 2005 earnings forecasts for CSR by a staggering 23 per cent and set a 1,000p price target on the stock. The broker argued that this valuation is justified given the technology group's unique growth prospects and high cash generation.

CSR certainly operates in a high-growth market. Shipments of Bluetooth devices, which it designs and markets, are expected to grow by 90 per cent this year and by 62 per cent in 2006. Given the group boasts a 56 per cent market share, it managed to notch up a 151 per cent jump in profits during the quarter just gone.

Elsewhere, Rio Tinto jumped 103p to 2,505p, BHP Billiton added 24p to 903p, Xstrata rose 38p to 1,388p and Antofagasta improved 49p to 1,738p as commodity prices continued to soar. The price of gold hit a 25-year high, helping Peter Hambro gain 11p to 838.5p, Bema Gold rise 4.5p to 170.5p and Cluff Gold to add 4.5p to 51p.

Vodafone was not so lucky, falling 2p to 122.75p, as investors were rattled by yet more negative broker comment. Credit Suisse First Boston cut back its stance on the mobile phone giant to "neutral" from "outperform" and warned that the group is facing increasingly competitive markets. CSFB said it was particularly worried about Vodafone's margins in Spain, Germany and Italy.

In the banking sector, Alliance & Leicester, up 24.5p to 924.5p, was tipped by Dresdner Kleinwort Wasserstein as the most likely to be taken over in the near future. DKW said: "A&L, by virtue of its more extensive product coverage, sustainable new business flows and distribution platform, would appear a more credible target than rival Bradford & Bingley."

As for recent suggestions that Barclays could be targeted by a predator, the German broker was sceptical. It believes the bank's management would be unwilling to sell out. Meanwhile, DKW warned those hoping that Lloyds TSB might be bid for that they will have to wait a long time. "Lloyds TSB management may be willing sellers but it appears an unlikely target for any of the large US banks capable of paying a premium. What could a US bank do with Lloyds that it couldn't do itself?" asked the broker.

Computacenter dropped 6.5p to 255p as Deutsche Bank was heard advising its clients to take profits from the stock, arguing that a bid is likely to provide little further upside. Last week, the Computacenter founders Peter Ogden and Philip Hulme tabled a bid for the computer hardware group. The German broker expects a sharp retreat by the stock should their offer fail.

Biofuels returned from suspension and dropped 44.5p to close at 101p. The company, which plans to produce diesel fuel from vegetable oil, said it had renegotiated its lending facility with Barclays and eliminated an unprofitable hedging agreement. The bank has made available £15m in additional working capital to Biofuels, which has so far spent £30m on building its bio-diesel plant in the north of England. The company promises to have production under way there by the end of February.

Victoria Oil & Gas was also in retreat, falling 14.5p to 85.5p, after the company confirmed that it is looking to raise fresh equity. Aberdeen Asset Management jumped 7p to 132.5p as investors piled into the group before its results next week. The fund manager is forecast to unveil a 64 per cent rise in full -year profits to £24m. Analysts will be particularly interested to hear how Aberdeen is getting along with the integration of Deutsche Bank's UK business, which it acquired in July.

Armor Group, the international security firm, fell 17p to 70p as brokers struggled to clear a forced seller of the stock from the market. Armor said it knew of no company-specific reason for the drop and market professionals expect it to rebound strongly on Monday.

Finally, Atorka Group was talked of as the most likely bidder for Low & Bonar, down 0.25p to 132.75p. The Icelandic company already controls 22.5 per cent of the floor coverings specialist, which on Thursday admitted to having received a takeover approach. Numis Securities sees a takeout price of between 135p and 145p as likely.