Market Report: Bullish advertising view makes ITV a must-watch
Friday 07 January 2011
A positive outlook for advertising revenue gave a boost to ITV, as investors switched on to the broadcaster. The company was lifted by a wide-ranging note on the media sector from Goldman Sachs, in which it upped its forecast for global advertising.
Saying it had "good ad momentum", the broker kept ITV as a "conviction buy" and picked out a number of positive factors, including its belief that it could be one of a number of European companies seeing "a benefit from cuts at state competitors".
As a result, the group touched 74.20p, before falling back towards the end of the day to finish on 73.05p, a rise of 1.05p. Goldman Sachs also talked up WPP and Informa – up 12.5p to 793p and 2.2p to 424.8p respectively – but it was less keen on Reed Elsevier, which retreated 6.5p to 531p.
Overall, the FTSE 100 failed to continue its strong start to the year, ending 24.35 points weaker on 6,019.51. The blue-chip index seemed in good shape for much of the session, but retreated in the final hours with investors cautious ahead of today's key non-farm payroll figures from the US.
The miners played a large role in the late fall, but Randgold Resources managed to jump up 15p to 5,105p after Citigroup upped its recommendation on the gold miner to "buy" from "hold".
Meanwhile, Centamin Egypt added 1.9p to 172p as market gossips speculated that it could be a takeover target. Rio Tinto and European Goldfields were two of the names rumoured as being potentially interested, and a price was mentioned of 275p-a-share, yet traders were left unconvinced.
Analysts from Nomura took a close look at copper and were generally bullish, agreeing "with the consensus view that... prices should enjoy further short-term upside". However, they did caution that "many pure copper equities now price in an over-optimistic long-term outlook." Xstrata, chosen as one of the broker's top picks, was up 15.5p to 1,515p, but Antofagasta – which was downgraded to "reduce" – fell 49p to 1,537p.
Arm Holdings closed near the top of the leaderboard, climbing 10.6p to 482p following Microsoft's announcement on Wednesday that it is developing a version of Windows that will be able to use the group's technology.
The chip maker's share price was given the boost despite widespread speculation about such a move already having done the rounds in December. Investec's analysts said the news was "further evidence of the longevity of the Arm business model", although they dismissed the constant rumours about Intel potentially considering making an approach for it, saying that they see "competition issues as too great to make any such bid possible".
After being heavily criticised in a report by the US presidential panel set-up to investigate the Gulf of Mexico oil spill, BP finished slightly worse off, down 2.35p on 496.9p. Importantly, the oil giant was not alone in being blamed, which calmed fears over the chances of it receiving a large fine, and Evolution Securities said the report supported its "view that a gross negligence case against BP looks hard to prove".
British Airways was yesterday's best performer on the top-tier index, gaining 12.6p to 300.2p despite revealing that December's snow is expected to have cost it £50m. It was helped up by Barclays Capital, which reiterated its positive stance on the sector and picked out BA as one of its main recommendations.
The after-effects of the extreme weather continued to weigh on the mid-tier index's retailers, with Mothercare falling sharply after it issued a profit warning. The babycare retailer dropped 33p to 565p as it revealed that its full-year profits would fail to meet forecasts thanks mainly to the snow, which disrupted shoppers in the run-up to Christmas.
It was not just the poor conditions, however, which led Espirito Santo Investment Bank to reiterate its "sell" recommendation. Its analyst Sanjay Vidyarthi said that investors "will want to treat the weather impact as a one-off and focus on the excellent international growth story, but we see longer term UK issues in terms of high operational gearing, a challenging toys market and increasing mid-market competition in clothing".
McBride took the wooden spoon, driven back 10.8p to 173p. The producer of own-brand cleaning products warned that its full-year performance could end up coming in near the bottom end of expectations, blaming what it described as "the uncertain outlook for the retail sector". The news led to its blue-chip peer Reckitt Benckiser falling as well, as it closed 58p weaker on 3,518p.
Small-cap company Mouchel booked gains of 20p to close on 127.75p after Costain increased its bid for the outsourcer. The construction group had a £119m offer rejected last month, but it has now returned with an improved package worth over £150m.
Clinton Cards was yet another group feeling the effects of the pre-Christmas weather, as a profit warning led to it plummeting 3p to 25p.
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