Market Report: Dividend let down sees BT miss out on bounce back

 

Investors in BT have been licking their lips recently at the prospect of a dividend hike. Ever since the telecoms giant announced new plans last month to tackle its massive pension deficit, hopes have been rising that a large increase to shareholder payouts would be the next step for the company.

Yet yesterday the City was on the receiving end of a wake-up call. JPMorgan Cazenove's Carl Murdock-Smith was the party pooper, with the analyst saying "hopes for a... 'hike' may be disappointed" and that a more likely scenario would be BT increasing the dividend "sustainably over time".

He also warned its results next month could see revenue guidance for the next financial year drop, claiming the group's target to return to revenue growth (excluding transit revenues) was "at risk" because of regulatory changes that will hinder its wholesale business, Openreach.

As a result, Mr Murdock-Smith decided to remove his "buy" recommendation, although he did raise his target price from 210p to 240p. In response BT missed out on the general bounce, sliding 5.4p to 213.2p, which – traders pointed out – was more than 3 per cent lower than where it was before announcing the new pension deal.

Not everyone was so downbeat, however. Credit Suisse's analysts decided to raise their target price to 250p and keep BT's "outperform" rating, arguing there was "still substantial scope for medium-term cost cutting that is not reflected in consensus forecasts".

After Tuesday's sharp sell-off had seen it finish at its lowest closing price of 2012, the FTSE 100 managed to shrug off a cautious start to trading yesterday and bounce up 39.19 points to 5,634.74.

The rally was being helped by the banks after HSBC's scribblers decided to upgrade their advice on the European sector to "overweight" for the first time in four years. Pointing out that earnings have dropped by two-thirds since 2007, they said there was now a "glimmer of light at the end of the tunnel" and that a "case can be made for over 50 per cent upside".

While Lloyds moved 0.79p higher to 30.59p, Barclays advanced 5.8p to 212.1p. The latter was given a further push by Investec's banking guru Ian Gordon raising his rating to "buy" in response to a run that has seen its share price lose around 18 per cent over the last eight sessions.

At the same time, Royal Bank of Scotland (RBS) managed to recover from an early fall to close 0.54p better off at 25.26p following the return of speculation claiming a deal between the UK government and Abu Dhabi could be close. Following reports last month that the two were in talks over a possible sale of part of the former's 82 per cent stake in RBS, the vague rumours suggested up to a fifth of the bank may be sold for around 35p a share.If true, this would still be well south of the 50p a pop average paid by us taxpayers.

The commodity stocks were also helping the modest rebound, with Antofagasta and Fresnillo jumping up 38p to 1,110p and 52p to 1,568p respectively. The miners were helped by forecast-beating overnight figures from US aluminium giant Alcoa.

Down on the FTSE 250, with Melrose reportedly getting close to a major acquisition, some in the Square Mile were speculating over who the manufacturing buyout firm may have its eye on. Oriel Securities' Harry Philips said he believed it could be a US-based target, adding that a deal would be "a considerable catalyst for the share price" as Melrose shifted up 6.9p to 406p.

Fashion chain SuperGroup surged up 29p to 607p in the wake of the latest data from the British Retail Consortium showing retail sales last month were 3.6 per cent higher than March 2011.

However, despite the welcome boost for clothing retailers, the figures did not stop blue-chip Primark-owner Associated British Foods from stretching its losing streak to a fifth, straight session by retreating 1p to 1,186p.

Thomas Cook closed 0.5p worse off at 22.75p, having added more than 13 per cent on Tuesday after announcing it was nearing a new deal with its banks. Reports from France claimed the small-cap tour operator had hired an unnamed bank to help with a potential sale of its business in the country, although City sources played down the prospect of a disposal.

ZincOx was being thrown out with the rubbish on AIM, sinking 8.4 per cent to 69.4p on the zinc producer's admission that its new recycling plant in South Korea will not open until May thanks to a broken valve.

Roxi Petroleum slumped 14.81 per cent to 2.88p after the explorer announced it was plugging and abandoning its NK-10 well in Kazakhstan. Meanwhile, PSG Solutions shot up 19.35 per cent to 148p as the property information firm revealed a tender offer that could see it return more than £4.1m to investors.

News
people
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Sport
premier league
PROMOTED VIDEO
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
people'I hated him during those times'
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
Dame Vivienne Westwood has been raging pretty much all of her life
peopleMemoir extracts show iconic designer 'felt pressured' into going out with Sex Pistols manager
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
fashionAlexander Fury's Spring/Summer 2015 London Fashion Week roundup
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late on stage in Brixton show
News
i100
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
News
people''Women's rights is too often synonymous with man-hating'
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

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam