Market Report: Buy or sell Barclays? Opinion is split

Are you a buyer or a seller? Barclays split opinion yesterday as the shares fell to the bottom of the benchmark index while analysts insisted it was a good time to "buy" the bank's shares.

Qatar Holding, the bank's largest shareholder, sold its remaining warrants in the bank. Qatar invested back in 2008 as part of Barclays' controversial capital-raising via Middle Eastern investors. Qatar sold some in 2009 and after this week's sale it holds 6.7 per cent of Barclays. As part of the deal, 303 million shares were placed via Deutsche Bank and Goldman Sachs at 244p. The shares got the wooden spoon, losing 13.7p to 240.5p.

But Investec's Ian Gordon retained his buy rating with a share price target of 255p and said: "We already knew Qatar Holdings could be expected to exercise its warrants. Notwithstanding inevitable, short-term technical weakness, Barclays remains our preferred UK domestic bank."

The deal came as news emerged that some of its biggest shareholders are urging Barclays to cut its investment banking division.

Barclays led the FTSE 100 index down 32.42 points to 5,786.72. Investor concerns were raised ahead of the next round of negotiations on the bailout for debt-laden Greece. Analysts also suggested that investors began to profit take after last week's buying frenzy.

Mining stocks suffered at the hands of cautious investors, but British Airways owner IAG soared toward the top of the index, up 1.4p to 170.4p, after analysts at Espirito Santo raised the share price target to 140p from 100p.

The City thinks ageing and old might not be so bad after all.

Well, when it comes to London's office space that is.

Property buffs at UBS have changed their minds about property group British Land and its "ageing portfolio". They say they are no longer "concerned" as they now reckon the business has been turning its old buildings with shortening lease lengths "from a threat into an opportunity".

UBS rates the UK's second-largest property firm a buy and raised its share price target by 3.5 per cent to 580p.

UBS's Harry Stokes particularly likes what British Land is doing in the City at its Broadgate estate near Liverpool Street station and he notes "management's success in potentially timing the lease expiry [dates] to harmonise with the delivery of new space".

The group is also building the Cheesegrater skyscraper in the City and Mr Stokes points out that its developments should bring in up to £71m of annual rent, half of which has been pre-let. He notes, too, that British Land's cost of debt is lower than its peers. The property company, run by Chris Grigg, charged up the benchmark index in morning trading and ended up 2p to 537p.

Jefferies' analysts think it is time to buy Tesco, giving it a 400p share price target and saying: "As we move into 2013, UK stores look much improved.

"A return to earnings growth and sharply stronger cash generation should be a useful valuation driver in the coming year," they added.

Panmure Gordon's Philip Dorgan released a note on the food retail sector and said although it "faces a tough 2013" he also is a buyer of "Tesco because we think that change will drive higher valuations". The supermarket giant fell 0.5p to 317.5p.

Over on the mid-cap index, gold miner Centamin saw its share price sink 4.1p to 60.6p after admitting that it must start exports again at its suspended Egyptian operation. The company had stopped exports after an Egyptian court said its Sukari mining rights were void. The ruling was subsequently changed but regulation problems remain.

The numbers of shares on loan from retailer Home Retail Group have shot up in the past few days to 16.5 per cent. Home Retail lost 0.2p to 110.1p.

Translation software firm SDL issued a profits warning yesterday and said full-year figures could be £4m short of expectations, at around £36m. The shares programmed a 72.5p decline to 438.5p – the biggest faller on the mid-cap index.

Old rumours refused to die that a bid could come in for publisher Informa and it edged up 1.7p to 405.5p.

Oil refiner and energy group Essar Energy reported a 18 per cent rise in earnings for the first half. The news powered the shares up 5.9p to 127p.

Aim-listed Eruma, which provides counter terrorism and intruder prevention, saw its shares leap 92 per cent to 4p after it appointed Saudi Technical Support to be its distributor in the Gulf state.

Hold

TULLOW OIL

Hold on to your shares in oil explorer Tullow Oil. Canaccord Genuity analysts think "the best we can hope for is for the stock to be flat" after its update on another Kenyan oil discovery. Yesterday's update follows a discovery made earlier this year and improves Kenya's long-term prospects for oil but the market reaction at Tullow was one of disappointment.

Investors were hoping for a bigger find and perhaps an indication that getting the oil would be easier. Canaccord scribes explained that "the deeper sandstone appears to be more challenging than we had previously anticipated, perhaps suggesting some weakness".

Tullow said that it picked the Twiga South well to gain more intelligence on the deeper prospects, even if it meant sacrificing a potentially higher result if it had tried closer to the first well. The Twiga South well encountered 30 metres of net oil pay, well below its earlier find of 100 metres in the country.

Tullow's shares lost 27p to 1,366p. Canaccord gave the shares a hold rating with a target price of 1,350p.

Buy

CRANSWICK

Buy bangers maker Cranswick. Shoppers cutting back have been opting for sausage dinners and this has helped the pork producer post a 21 per cent jump in half-year, pre-tax profit to £22.5m. Analysts at Investec rated the stock a buy and gave it a price target of 920p. Investec think its operational improvements and "constructive pricing discussions" with its customers have gone well and they have kept their 2013 forecasts. Investec notes Cranswick has offset rising input costs so the margin hit is being contained.

Sell

KINGFISHER

Sell out of Screwfix and B&Q owner Kingfisher. Analysts at Seymour Pierce expect the DIY retail group's third-quarter update on Thursday to lead to a further reduction in consensus earnings. Seymour Pierce forecast operating profits down by 7 per cent to £255m from £273m. The analyst also thinks that as a result of pressure on the numbers, management will consider a share buyback or a special dividend to appease shareholders. They reiterated their sell rating with a share price target of 240p.

Hold

Associated British Foods

Hold on to your bags of Associated British Foods shares, scribes at Investec recommend. The Primark-to-sugar owner got a hold rating and share price target of 1,400p. Despite being "bullish on the prospects for Primark" Investec's Martin Deboo thinks the share price is already fair.

Mr Deboo admitted Primark impressed again at its preliminary results this month and it is now being valued on the same level as Swedish retailer H&M and Zara owner Inditex. But comparing it with H&M's growth in its 1990s' heyday is a worry, Mr Deboo warned: "The late 1990s was, well, the late 1990s and buying into H&M at such high multiples was an act of folly, judged with hindsight. We remain admirers of Primark, but cautious holders, at this level and would be inclined to take some profits on the back of recent momentum."

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