Market Report: Footsie holds up well in a blitz of downgrades

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The Independent Online
A DOWNGRADING BLITZ hit the stock market. Analysts cut their profit estimates for a wide range of companies, from engineers to retailers. And for good measure, there was another crop of company profit warnings, including one from Footsie constituent, Reckitt & Colman.

The household products group was the worst performing Footsie share, tumbling 150p to 900p after reporting a sales slowdown. Its discomfort spread to Unilever, off 12p to 630p.

The downgrades included Abbey National, Arjo Wiggins Appleton, BTR and Next.

Abbey, up 12p at 1,179p, had to contend with Merrill Lynch lowering its estimates from pounds 1.56bn to pounds 1.53bn and from pounds 1.7bn to pounds 1.68bn. But the investment house retained its buy advice, putting a 1,300p target price on the shares.

AWA, the packaging and paper group, was a victim of Charterhouse Tilney. The shares shaded 2.5p to 112p as Charterhouse moved from pounds 220m to pounds 210m and from pounds 240m to pounds 216m.

BTR was hit by Dresdner Kleinwort Benson, which lowered its estimates from pounds 665m to pounds 658m and from pounds 620m to pounds 590m. However, the shares of the old conglomerate, now rated an engineer, have suffered much more severe punishment in the past and were little changed at 105p.

Next, the fashion chain, was weighed down by an ABN Amro downgrading on Thursday. The shares fell a further 18p to 453p after Salomon Smith Barney and CSFB put out lower forecasts. CSFB, saying sell, cut pounds 144m, while Salomon went to pounds 160m. Last year Next made a record pounds 184m.

Others to suffer forecast cuts included engineer Haden Maclellan (Albert E Sharp) and computer group MSB International (Merrill Lynch).

BTP, the speciality chemical group, lost 21p to 379.5p as BT Alex.Brown turned more cautious, and Tarmac lost 3.25p to 103.75p as Salomon set an 80p target.

Elsewhere, Independent Insurance, down 32.5p to 229p, warned of a pounds 15m bad weather hit and Cornwell Parker, a furniture and fabrics group, slumped 17.5p to 74p on a trading warning. Meggitt, the engineer, fell 12p to 130.5p following the loss of its flagship flight display contract with Boeing.

Footsie, helped by New York, stood up relatively well to the battering. It closed 14.2 points higher at 5,463.2, although trading was thin. The supporting indices were mixed. The mid cap fell 18.8 points to 4,826.4 and the small cap nudged a 1.4 gain to 2,067.1.

Flat figures from John Lewis and a negative retail review from Panmure Gordon ruffled many retailers. Marks & Spencer, still embroiled in a row over the appointment of a new chief executive, fell 22p before rallying to end unchanged at 448p. J Sainsbury was cut 3p to 530p after Schroders offered a reduce recommendation.

BICC, the cable and construction group, was a star performer. The arrival of the aggressive asset specialist Wassall, with a 7.35 per cent stake, pushed the shares 9.5p higher to 66.5p. Whether Wassall will attempt a bid or is merely seeking to smoke out a possible predator remains to be seen. Many believe BICC should be split, freeing the construction side from the troublesome cables division. Earlier this week Henderson Crosthwaite estimated a break-up value of 120p.

Oils continued to draw strength from the Gulf crisis. Shell flared 10.25p to 364.75p and British Petroleum 16.5p to 916p. Lasmo edged ahead 4.5p to 178p and Enterprise 9p to 404p.

Bilton, as Slough Estates emerged victorious, put on 8p to 306.5p and Slough slipped 5.5p to 281.5p.

Capital Radio failed to make any lasting response to bid speculation. At one time up 32.5p, the shares shaded 1p to 561.5p. A suggestion that Scottish Media is looking to mount a pounds 500m bid prompted the early excitement.

GRE, the Guardian Royal Exchange insurance group, which rose in late trading on Thursday, fell back 11p to 281p. Warburg Dillon Read did not help by reducing its profits forecasts. The failure of a bid to materialise lowered Burn Stewart Distillers 1p to 18p.

The hard-hit cash-and-carry chain Booker enjoyed some bottom fishing, rising 6.5p to 68.5p and Express Dairies responded to positive comment, up 9p to 164p.

SEAQ VOLUME: 726.9m

SEAQ TRADES: 54,057

GILTS INDEX: n/a

PROTEUS International, the health care group, edged ahead 3p to 39p as Nomura, the Japanese investment group, picked up 5 million shares from Proteus founders Kevin Gilmore and John Poole. The deal lifted the Japanese interest to 7.23 per cent. The founders now have 6.76 per cent.

Proteus shares touched 83.5p earlier this year and once reached the heady heights of 365p.

RANK, the troubled leisure group where profits have tumbled and break-up marauders circle, edged forward 5.5p to 254.5p. A bid of pounds 900m for the leisure division has been, it is believed, rejected. Investment house Robert Fleming Securities calculates the break-up value of Rank shares at 330p. It believes the price should move nearer to 330p as corporate activity begins to unfold.

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