As the benchmark index soared to a new, five-year high, telecoms giant Vodafone got cut off. Its shares were the worst performer on the blue-chip listing as the City took in a 42-page diatribe from Bernstein Research on why it is time to sell the phone group shares.
In a note entitled Downgrading to Underperform Before They Pick Their Poison, Bernstein's analysts slashed their rating from market-perform to underperform and reduced their price target to 135p. The shares dialled up a 3.3p loss to 163.5p in response.
Vodafone shares had been on a winning streak last month when speculation mounted about a potential sale of its US joint venture in Verizon Wireless or a possible bid by Verizon for the entire group. But last week, rumours that Vodafone could be interested in a €10bn (£8.6bn) bid for the German cable operator Kabel Deutschland sent investors running.
Whether or not the German deal goes ahead, Bernstein reckons the "landscape of European telecoms has changed dramatically in the last year" and as "neither the lowest-cost provider nor a differentiated operator" Vodafone is destined to decline.
Bernstein thinks Vodafone is too late to the party to change this and even buying assets or companies in Europe to catch up will not help as they will just be too expensive and time consuming. Vodafone's European operations are in "structural decline" in the "over-supplied and commoditised business of European wireless".
Even a sale of the Verizon joint venture to raise cash won't help, they claim. Bernstein thinks shareholders "will not enjoy the value-creating 'event' with Verizon Wireless for which so many hope". In the US, Verizon Wireless' valuation is "at its peak" Bernstein thinks, and the US wireless market has already become "significantly less attractive structurally".
Although Vodafone was clearly out of favour the FTSE 100 index added 60.88 points to 6,379.07. Investors were cheered by better-than-expected German ZEW economic sentiment figures.
Tour operator Tui Travel took the top spot, up 13.1p to 329.75p. Peel Hunt scribes raised their rating to hold and gave it a share-price target of 303p.
Pharmaceutical group Shire, up 22p to 2,072p, got a boost from JP Morgan analysts who rate it overweight with a 2,340p target.
British Airways owner IAG said it will not raise its €7 a share bid to buy out shares in the Spanish budget carrier Vueling and its shares added 5.8p to 230p.
Over to the banks, where Morgan Stanley scribblers switched allegiance from HSBC to Standard Chartered. HSBC "looks fairly valued" on lower growth expectations. In contrast, Standard Chartered shares have underperformed and "present an opportunity", they said.
Morgan Stanley's overweight recommendation for Standard Chartered came with a share-price target of 1924p. HSBC was reduced to "equal weight" with a share-price target of 737p.
The shares responded, with Standard, up 41.5p to 1,771p, while HSBC rose 2.8p to 728.8p.
Anglo American recovered 12.5p to 1,995.5p after Anglo American Platinum said it would restart work at its mine in Rustenburg after violent clashes between rival unions on Monday.
Over on the mid-tier index, analysts predicted that soft-drink maker Britvic is still worth buying despite the delay of its £1.5bn merger with AG Barr.
The tie-up is to be investigated by the Competition Commission, but analysts at Nomura rated Robinson's cordial maker Britvic a buy, claiming its US expansion is grounds for snapping up the shares. Nomura's Ian Shackleton will drink to a price target of 480p, and the shares trickled up 10.3p to 405.3p. Irn Bru owner AG Barr added 1p to 503p.
The competition regulator also gave the green light for Rank to complete its takeover of Gala Casinos. However, it must not buy Gala's casinos in Aberdeen, Stockton-on-Tees, Bristol and Cardiff and must also sell the licence it holds in Edinburgh for the £205m takeover to happen. The shares were 2.4p weaker to 165p.
Aim-listed Chariot Oil & Gas plunged 5.5p to 24.5p after the company said it would not start drilling new wells until 2014. Tech group BATM Advanced Communications lifted 1.25p to 19.25 after an upgrade by Shore Capital analysts.