Market Report: Bargain-hunters eyeing Misys send shares higher

 

Bargain hunters zeroed in on Misys last night, with the financial software group's shares rallying after analysts flagged up the thin valuation.

The stock has had a rough couple weeks, falling from highs well above 400p in late June to about 235p earlier this week, after the US-based payment processor Fidelity National dropped plans to buy the group. With no deal – the transaction would have valued Misys at about $2.4bn (£1.5bn) – the market began chipping away at the gains inspired by the bid.

But the sell-off has gone too far, according to Peel Hunt's analyst Paul Morland, who told clients to pile in last night, helping Misys to rise by more than 6 per cent, or 14.3p, to 249p.

Despite the sharp share price falls, which leaves the stock trading at a discount to the sector, Mr Morland said: "We have observed no change in the outlook for the business, other than concerns that banks may reduce spending on software."

And as far as those worries were concerned, he pointed out that revenues in Misys's banking arm "held up well" during the credit crunch "thanks to around 50 per cent in maintenance sales". Moreover, the company has no exposure to the capital budgets of large banks and it draws limited revenues from the troubled countries on Europe's southern periphery.

Peel Hunt also highlighted the potential read-across from bid activity elsewhere in the sector, with HP paying a massive premium to buy FTSE 100-listed Autonomy.

Overall, market sentiment remained weak, with the FTSE 100 losing 51.47 points to 5,040.76, having fallen as far as 4,929.55 earlier in the session.

Yesterday's decline rounded off a volatile week, with London's benchmark losing about 5.3 per cent over the course of five sessions. The mid-caps were also lower last night, easing by 101.16 points to close at 9,759.06.

Looking ahead, Will Hedden, a sales trader at IG Index, warned that next week may see yet more ups and downs as markets eye any signs of weakness in key economies. "It's been a turbulent week for markets, and there's no reason to believe that we've seen the last of this," he said.

Autonomy was far and away the standout riser of the day. The software group soared by more than 71 per cent as investors digested the details of the recommend offer from Hewlett Packard. As Peel Hunt noted, the 2,550p per share bid was nothing if not generous. "Holders should quickly accept this truly golden offer," the broker advised, as Autonomy rose by 1,023p to close at 2,452p.

The deal generated much talk around the group's FTSE 100-listed peer ARM Holdings, the chip designer that has long been a favourite of speculators pegging their hopes on interest from Apple or Intel. The analysts at Numis did their bit to aid the share price rise, pointing that Arm may well end up going the way of Autonomy.

"The stock should continue to trade at high price to earnings multiples, or otherwise fall prey to another cash rich goliath the same way Autonomy has," the broker said, revising its view to "buy" and helping Arm's stock to rise by 11.3p to 490p "We believe the depressed share price following recent market turmoil represents a buying opportunity."

Elsewhere, growing concerns about global growth continued to drive gains in the gold price, which touched highs of around $1,878 per ounce.

The rise in gold prices in turn continued to drive interest around precious metals mining companies, with Randgold Resources one of the biggest beneficiaries. The Mexican silver miner Fresnillo was also strong last night, adding more than 7 per cent or 130p to 1,970p. African Barrick Gold, on the other hand, was marginally lower on the day, ending 1p behind at 535.5p

UK-focused banks remained under pressure yesterday. Concerns about the state of the eurozone, and its potential impact on the financial system, continued to dampen the mood. As a result, part-nationalised peers Lloyds and Royal Bank of Scotland fell by 1.4p to 28.38p and by 1.18p to 20.77p respectively. Rivals with a greater exposure to emerging markets fared better, with Standard Chartered, for example, closing a healthy 31p higher at 1,362.5p.

Further afield, Dixons Retail fell by 0.45p to 11.87p as UBS looked ahead to the high-street group's quarterly update in September, warning clients to brace themselves. On its estimates, the group's UK like-for-like sales are likely to be down by 12 per cent.



The builders' merchant and DIY retailer Travis Perkins suffered a negative end to the week, retreating by 19.5p to 723.5p, after the analysts at Goldman Sachs turned bearish.

"Our detailed analysis of UK GDP components suggests low volume growth, which we believe will result in continued price pressure and slower margin improvement," they said in note to clients, lowering their recommendation on the stock to "sell" from "neutral", with a revised 780p target price, compared to 1,117p previously.

News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
Life and Style
The new Windows 10 Start Menu
tech
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
PROMOTED VIDEO
Travel
Bruce Chatwin's novel 'On the Black Hill' was set at The Vision Farm
travelOne of the finest one-day walks you could hope for - in Britain
Sport
footballManchester City 1 Roma 1: Result leaves Premier League champions in danger of not progressing
Arts and Entertainment
Gay and OK: a scene from 'Pride'
filmsUS film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
News
i100
Life and Style
Magic roundabouts: the gyratory system that has excited enthusiasts in Swindon
motoringJust who are the Roundabout Appreciation Society?
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
booksWell it was good enough for Ancient Egyptians and Picasso...
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?