Market Report: EasyJet nosedives on third broker downgrade

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The Independent Online

But those who have held easyJet stock over the past year cannot complain. It has soared 80 per cent in the past 12 months and 35 per cent since January. ABN insists there is little further upside for investors, even if easyJet comes out with a bullish statement on 5 August - its next scheduled update to the City.

The Dutch broker worries that if the airline were to slightly undershoot market expectations, its shares are likely to come under heavy selling pressure given their recent rise. ABN said: "Should earnings guidance be lowered, albeit slightly, we can imagine the share price reacting with more vigour than if easyJet were to put out a positive statement." ABN also warned that the terrorist attacks in London may have had a negative impact on bookings at the airline.

Elsewhere, Morgan Stanley pushed Egg 0.5p lower to 111.75p, as it drew investors' attention to the internet bank's recent results which it says confirmed the company faces a slowdown in consumer lending.

The US broker believes Egg could be hit by growing competition, and concluded that the impact of these factors would weighon profits at the online bank.

JD Wetherspoon dropped 3.5p to 275.5p after brokers predicted that shares in the pubs group are set for a downturn now that the company has ceased its share buy-back programme. Wetherspoon has stopped the programme because it is about to enter its close period.

Brokers calculate the pubs group has spent £40m on buying back its shares over the past year at an average price of 259p, and suggest that without this support they will drift lower over the summer.

First Choice fell 2.75p to 186p as the Spanish hotels group Barcelo sold £50m-worth of shares in the UK tour operator. Deutsche Bank handled the deal, in which Barcelo disposed of 26 million shares at 186.25p. The Spanish company seems to be slowly reducing its exposure to First Choice. Last December it completed a similar sale. Meanwhile, the FTSE 100 finished 6.7 points higher at 5,270.3 as dealing rooms were awash with rumours that a takeover bid for a blue-chip company is imminent.

All the usual suspects were mentioned, including O2, up 1.25p to 139p, Scottish Power, off 2.75p to 507.25p, and Exel, 16p better to 943p. In fact, dealers were surprised to see Exel notch up such a strong rise given comments from its chief executive, John Allan, who seemed to pour cold water on the persistent bid rumours surrounding the logistics company.

Schroders, 34p higher at 839p, was boosted by an upgrade at Citigroup. Raising its recommendation on the fund-management Goliath to "buy" from "hold", the US broker alerted its clients to the fact that Schroders is very likely to benefit greatly from rising stock markets across Europe and in the US. It believes the group's first-half results on 16 August are very unlikely to disappoint shareholders.

PD Ports jumped 4p to 111p after Arbuthnot Securities cleared a large seller from the market. It placed a 14 per cent holding in the ports operator with a long-term institutional investor.

Among smaller companies, Black Sea Property ticked 0.25p higher to 23p as the investment group focused on making money from the booming property market in Bulgaria unveiled a 20 per cent increase in its net asset value.

PlusNet rose 17p to 257.5 in response to the purchase of 14,000 shares at 232p by Kevin Adams, a non-executive at the internet-services provider. Mr Adams' move comes afterstrong interim results from PlusNet.

Sanatana Diamonds enjoyed a sparkling debut on AIM, the junior market. Having raised £2.1m through a placing at 82p the Canadian miner saw its stock price roar higher to close at 86.5p. Elsewhere, Ubet2Win, which owns leading bookmakers' pitches at some of the UK and Ireland's top racecourses, also had a great maiden session on the junior market. The company's shares listed at 3.5p and closed at 4.87p, valuing Ubet2Win at more than £7m.

Finally, Floors 2 Go rose 4p to 31.5p while United Carpets gained 2p to 18.5p on rumours the two floor-coverings retailers are in merger talks. Of late, both have fallen out of favour with investors after major profits warnings.

Floors 2 Go shocked the City in June when it indicated that its second-quarter sales figures would show a 20 per cent slump in sales, while two months earlier United Carpets complained that difficult trading conditions would greatly undermine its profitability.

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