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Market Report: Burberry does it in style and hits a high

  • @LauraHChesters

Traders don’t usually pay attention to London Fashion Week but one of its stars was à la mode yesterday in the City. The British brand Burberry was feted by HSBC’s luxury experts who added it to their Super Ten Portfolio and said “its digital  vision sets the group apart.”

HSBC’s Erwan Rambourg said Burberry’s “strategic initiatives are coming together” and raised the target price to 1,900p from 1,750p and retained his buy recommendation. He highlighted its strong presence online and via social media and said its plan to take control of licences such as perfume and overseas operations will pay off. Mr Rambourg added that any concerns about its strategy have been “blown out of proportion.”

Burberry might already be in focus ahead of Fashion Week, which kicks off on Friday, but some traders may have also noted comments at the weekend from the chief executive, Angela Ahrendts. She said she would not rule out adding another brand to its stable eventually.

The positive buy note from HSBC pushed the shares to an all-time high, up 35p to 1,635p.

The wider market remained cautious as military action in Syria continued to be the focus. Export data from China plus news that Tokyo will host the 2020 Olympics and Japanese GDP figures boosted Asian markets but failed to lift London, and the FTSE 100 was 16.59 weaker at 6,530,74.

Energy giant BG Group was at the  bottom, down 65p to 1,217p, after warning that unrest in Egypt and delays in Norway would hit production.

Pharmaceuticals giant GlaxoSmithKline has agreed to sell its Ribena and Lucozade brands to Japanese drinks firm Suntory for £1.35bn but the drugs giant slipped 11p to 1,640p.

Analysts at Liberum Capital found more evidence to dislike publisher Pearson. Liberum’s Ian Whittaker said the poor update from US higher education content provider J Wiley & Sons  is a “negative read across” for Pearson which was 9p worse off at 1,282p.

The FTSE Group was getting ready to tally up who is in and out in its quarterly reshuffle. The final decision comes tomorrow using close of play data from today. But as of last night bottling group Coca-Cola HBC, up 11p to 1,885p, Mike Ashley’s Sports Direct International, 8.5p better at 713p, and packaging and paper group Mondi, 8p stronger at 1,078p, will be moving in to the FTSE 100.

Punters had held out little hope that flight support services specialist BBA Aviation would pull off its deal with Dubai Aerospace Enterprise, so the shares were spared a crash-landing  after talks terminated.

Mid-tier listed BBA had been in talks to combine parts of Dubai Aerospace Enterprise’s business into its group but news came over the weekend that the deal was grounded.

Analysts at Jefferies said the hope of a deal “had not been factored into the shares”, so there was no  disappointment for the City and no big price move. BBA descended 3.4p to 315.4p.

Technology specialist CSR was 22.5p stronger at 517.5p following a note from Liberum Capital who raised it to buy  from hold with a 550p price target because it “trades at a discount to its peer group”.

News that property website Zoopla could also be in line for a stock market listing was a boost to its part-owners. Zoopla was reported to have hired investment bank Credit Suisse to “explore strategic growth opportunities” including a £1bn float. DMGT, publisher of the Daily Mail, controls Zoopla and was 14p better at 804p. Estate agents Countrywide, up 3.5p to 543.5p, and LSL Property Services, who ticked up 4.75p to 471.75p, also own stakes in Zoopla.

It looks like activist investor Crystal Amber Fund has developed a sugar addiction. Yesterday it emerged its stake in chocolate retailer Thorntons has  doubled to 6.52 per cent. Thorntons was 6p sweeter at 85p.

Over on AIM, Gulf Keystone said its shares will be suspended today ahead of a court ruling over its Kurdistan oilfields. Gulf jetted up 4.25p to 187.75p ahead of the suspension.

Metals, energy and commodities services group Brady reported revenues up 23 per cent to £14.9m but its new business grew at a slower pace than anticipated by the market, and it declined 11p to 61.5p.

Wimbledon-based Forbidden Technologies said it has partnered with Microsoft on cloud video-editing software Windows Azure, and that produced a 2p gain to 29p. African Mining & Exploration bought an 80 per cent interest in the Jangamo project in Southern Mozambique, near Rio Tinto’s Mutamba deposit. African advanced 0.625p to 3p.

Buy: Innovation

Fill your boots with Innovation, Investec advises, now that the outsourcing business has extended its “subsidence contract” with Direct Line to £60m from £40m. The broker is keeping forecasts as they are but says the deal “strengthens [Innovation’s] position in this market”. The shares are 28.25p with a target of 33p.

Sell: Darty

Cantor Fitzgerald started the week by downgrading Darty from hold. The broker says the electrical retailer’s share valuation is “starting to look demanding” and adds that “the market is unlikely to improve over the next year”. The shares are 79p but should be 65p a pop.

Hold: AG Barr

Hang on to AG Barr, Canaccord Genuity recommends. The soft drinks maker has a new facility for which the broker has high hopes. Apparently AG Barr’s key suppliers are now within a 30-mile radius, which Canaccord expects will bring a “significant reduction in distribution costs”. The shares at present are 552p with a target of 570p.