Market Report: Goldman's approval breathes life into BSkyB

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The Independent Online

Goldman said: "We believe the tone of the results will be upbeat, with the company pointing to initial success of its new strategy, one year on from its launch." The US broker is convinced that the figures will be well-received by the City and so forecasts the stock to perform well today. It believes fair value lies somewhere near the 650p level.

James Murdoch, the chief executive of BSkyB, will unveil the group's full-year numbers 12 months after announcing his controversial growth plan. Mr Murdoch has aimed to boost the broadcaster's subscriber base through a major marketing campaign.

Shares in the group have yet to fully recover from the scepticism in the City that surrounded the strategy after it was announced. But Mr Murdoch has slowly regained investors' trust, especially after Sky boasted that it had won 83,000 new subscribers during the fourth quarter. This left the company moving fast towards its target of 8 million users.

There was once again heavy demand for O2, 3.25p higher at 141.25p. Dealers reported "hot money"flowing into the stock on speculation that a bid for the mobile operator could be imminent. Some talked of an offer for the company valuing it at up to 200p a share. Spain's Telefonica is the latest name to be linked with a move on O2 as market professionals dismissed Deutsche Telekom as a bidder on the grounds that it has too much debt to complete such a coup.

Should such a major takeover take place, dealers expect the FTSE 100 index to soar. Saying that, blue chips seemed to do okay without it yesterday. The index of London's leading shares closed 36 better at 5,327, a level not seen since December 2001. The FTSE 250 also fared well, gaining 18 to 7,636. ICI, 6.25p higher at 269.25p, was supported by bullish comments from Morgan Stanley. The US broker drew attention to the fact that the international paints manufacturer generates 40 per cent of its earnings from Asia, the world's fastest-growing region, and so urged its clients to buy into the company.

BPB was not so lucky, closing 6.5p lower at 708p after Dresdner Kleinwort Wasserstein suggested there is a good chance that Saint Gobain might walk away from its bid for the group. The German broker estimates there is a 35 per cent probability of this happening and suggested that it would send BPB shares crashing to below 600p. In fact, shortly beforeSaint Gobain's approach for the plasterboard maker its stock traded at less than 550p.

Exel added 6.5p to 956p as Merrill Lynch said the logistics group is without doubt an acquisition target. The US broker argued that a predator might be willing to pay up to 1,210p a share for control of the company. This implies an upside of nearly 30 per cent from current levels.

Housebuilders were hit by disappointing results from Ben Bailey, 42.5p lower at 397.5p. The group reported an 18 per cent drop in interim pre-tax profits, blaming the recent slowdown in the UK housing market. This sent its rival Bellway 8.5p lower to 855p, Barratt Developments 4.5p weaker to 718p, Persimmon off 10p to 785p and Bovis Homes down 6p to 645p. Among smaller companies, CeresPower added 4.5p to 102p as a large seller was finally cleared from the market by Numis Securities. Brokers expect the stock to gain further ground over the coming days. Earthport ticked 0.25p higher to 34.5p after the company enacted a 76-for-1 share consolidation. Earthport also revealed that Mike Harrison, its chairman, and Neil Clayton, the finance director, had subscribed for 75,000 shares at 38p in return for cancelling a loan they had made to the group.

Emerald Energy rose 7p to 168.5p on whispers that a positive drilling update is on the way from the group's Vigia well in Colombia. Gossips hope Emerald will indicate that the oil field is bigger than first thought. NCC added 1.5p to fresh all-time high of 280p on talk that demand for software group's key product has risen sharply over the past quarter. Word has it brokers may soon have to upgrade their forecasts for NCC.

Uranium Mining Corporation debuted on AIM. The group raised £2.6m at 25p and the stock closed at 31.5p. Uranium Mining will use the cash to fund exploration at its blocks in North-east Canada. Finally, punters should keep an eye on Blue Star Mobile today. The provider of video content to mobile phones is believed to have signed a deal with Motorola. Blue Star closed at 13.25p.

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