Market Report: Citi - BT’s on the ball with TV sports deal

BT may have hit the back of the net with its new free TV sports channel, according to analysts at Citi.

A survey by the bank of 1,365 households found 25 per cent are interested in BT Sport, which will feature Jake Humphrey as a presenter and be offered free to BT Broadband customers, and 13 per cent are prepared to switch internet supplier for the channel or pay to get it on top of their existing TV package.

The scribblers at Citi reckon this means: “BT Sport may make it tougher for BskyB to penetrate BT’s broadband base but easier to penetrate that of TalkTalk and Virgin Media.”

As a result they upgrade BT to buy; keep BSkyB and Virgin Media as buys; and downgrade TalkTalk to sell, estimating that the telecoms firm may lose as many as 130,000 broadband customers to BT when the channel springs into life.

BT surfed up 6.84p to 311.24p, BSkyb added 3.35p to 778.35p, while TalkTalk crumbled 14.56p to 220.34p.

George Osborne has been playing favourites with the state-backed banks this week with a knock-on effect on share prices. After signalling during Wednesday’s Mansion House speech that a reprivatisation of Lloyds could begin within months, shares in the Black Horse leapt, yesterday galloping up 1.07p to 62.3p.

But it was a different story for Royal Bank of Scotland. The Chancellor used the same speech to announce he would look again at plans to split RBS into a “good” and “bad” bank, sending the shares tumbling 13.89p to 289.81p.

Abu Dhabi’s largest private healthcare provider, Al Noor, debuted on the London Stock Exchange with a grey listing, selling at least £221m of shares in an initial public offering that valued the group at £672m. However, the share price of 578p was in the lower half of its original 525p to 725p range.

The outsourcing and distribution firm Bunzl was the biggest riser on the blue-chip index after getting the thumbs-up from JPMorgan Cazenove. The company is due to give a trading update this Wednesday, and analysts at the broker are confident it will be upbeat. Bunzl jumped 35.84p to 1,268.84p.

The microchips maker Arm Holdings, whose processors power Apple’s iPhone, continued to fall as BNP Paribas reissued a neutral rating of the Cambridge-based firm. Arm lost 15p to 784p.

Despite an early rally as investors snapped up bargains, the top-flight index couldn’t hang on to gains, closing down 24.14 points at 6,135.37. It marks the fifth consecutive week of losses on the FTSE 100 for the first time since May 2011.

Elsewhere Liberum sounded a warning about housebuilders. Developers across the country have received a boost from the Government’s Help to Buy and Funding for Lending schemes, which have got the mortgage market moving again. But Charlie Campbell at Liberum said shares in building firms aren’t just dependent on the housing market and could soon take a hit. Mr Campbell said the shares “are also driven by interest rates and interest rate expectations”.

He points out that futures contracts indicate the base rate will rise from 0.5 per cent to 1.5 per cent by December 2015, which could act as a “brake” on any further share price rises.

Keith Bard at Numis was more optimistic, reiterating his buy rating for Countrywide “based on the positive outlook for the housing market”. Countrywide added 17.24p to 509.74p, while Taylor Wimpey lost 0.33p to 92.12p and Persimmon tumbled 9.36p to 1,138.64p.

In the mining sector, Rio Tinto was up on the news that its subsidiary Turquoise Hill is considering selling its stake in the Australian explorer Inova Resources, with Citigroup confirming the bank’s role in the potential sale. Rio, which owns 56 per cent of the A$145m (£86m) company, dug up 14.59p to 2,689.09p.

Despite announcing it had sold a further 15 per cent of its Jimblebar iron ore project to two Japanese firms for $1.5bn (£970m), BHP Billiton lost 17.28p to 1,711.22p. Precious metals miner Fresnillo also continued to fall, 42.93p to 917.57p.

Polymetal and Evraz dropped out of the FTSE 100 due to declining commodity prices. Polymetal lost 17.06p to 523.94p and Evraz added 0.04p to 110.34p.

The tech firm Vislink, in a turnaround phase, saw its shares climb 2.7p to 32.7p on the news that its executive chairman, John Hawkins, and financial director, Ian Davis, were on a shopping spree for shares.

Buy

Betfair

Betfair is an odds-on favourite of the scribblers at Panmure. The betting exchange site is due to announce full-year results on Thursday, and analysts at the broker are expecting good things. Panmure’s Simon French says: “The focus will be on how management intend to restore shareholder value equivalent to the 950p a share rejected by the board earlier this year.” He has a target price of 1,000p for shares that are in the region of 820p.

Sell

Debenhams

The retail sector is having a tough time and Debenhams is suffering along with the rest of them. That’s the verdict of Kate Calvert at Cantor, who reiterates her sell rating with a target price of 70p on shares hovering around 87p. The department store has had a tough start to the year, and Ms Calvert says: “May and June have been easier, but we believe more promotional, and so it is unclear whether the sales shortfall early on would have been made up.”

Hold

Dixons

The glass is half full when it comes to Dixons, Numis says. The electrical retailer has done well to capture 30 per cent of Comet’s business and is faring well in the online market, but it needs to do more to stem UK property losses and interest costs, Numis’s Matthew Taylor says. He gives a target price of 45p on shares that are changing hands at around 43p.