Market Report: Fall helps Micro Focus' takeover credentials

Investors in Micro Focus were given some hope yesterday after its disastrous session on Tuesday, when it lost more than 25 per cent of its value, as they were told it was now more likely to be the target of a takeover attempt.





The software group dropped over 100p earlier in the week thanks to a profit warning - its second in six months - but last night it advanced 5p to 296p, with analysts expressing their confidence that there would be no more dramatic dips.



Among those urging the market to take stock was Singer Capital Market's Tintin Stormont, who reduced the company's price target to 330p but kept his "buy" advice on the stock. There has been speculation in recent months that Micro Focus could attract an approach, and Mr Stormont said he believed "at this level, [it will] look very attractive to players like IBM and HP."



The analyst praised its cash generation as well, giving this as another reason why although "estimate momentum has been poor and confidence in the business is shaky, we believe there is enough support at these levels".



Also relatively positive on the group was Panmure Gordon's George O'Connor, who changed his recommendation from "hold" to "buy" and said "the problems are identified and in our minds fixable".



Meanwhile Numis Securities' David Toms said Micro Focus was "substantially undervalued and will either demonstrate this through near-term operational performance, or will become a strategic target".



Despite disappointing domestic data, the FTSE 100 managed to add 48.19 points and close at 6,085.27, helped by the banks continuing to move forwards following strong results from Barclays - up 3.25p to 332p - on Tuesday.



The blue-chip real estate investment trusts (Reits) were building towards the summit, thanks to a large note on the sector by HSBC. Despite its analyst Nicolas Lyle saying he was wary of "UK Reits' potential as an inflation hedge", he upgraded his rating on British Land to "overweight" and Land Securities to "neutral", prompting a rise of 14.5p to 557.5p and 25p to 727p respectively.



The latest figures from Heineken seemed positive for SABMiller, which finished 3.5p ahead at 2,106p. The Grolsch-brewer's rival revealed forecast-beating numbers, thanks in part to savings made, and it also issued a bullish outlook on Africa and Latin America, both regions in which SABMiller has a strong exposure.



There was a boost of 2.4p to 140p for RSA Insurance, as market gossips became excited over the return of vague takeover talk around the company, with speculation spreading that it could be about to receive an approach.



Resolution shot up 16.6p to 280.6p as Redburn started its coverage on the Clive Cowdery-owned investment vehicle with a "buy" note. Meanwhile a positive initiation also helped GKN - 9.3p stronger at 217p - as Investec said it was "benefiting from volume recovery in its core automotive and industrial markets".



African Barrick Gold and BHP Billiton both released figures, but the miners saw rather different reactions. The former gained 5p to 532p, as its earnings for the 12 months beat expectations, but the latter finished 36p behind at 2,464p despite revealing record profits.



There was little movement on the second line for PartyGaming, which edged down 0.1p to 174.8p, as analysts disagreed on what the future will bring after it merges with bwin.



Noting that the new company's shares are set to start trading on 1 April, Morgan Stanley said the deal was "not an April fool", adding that the gambling company's "valuation is far too low". However, Investec's Paul Leyland was much more cautious, especially on Germany, where he said there is a "real risk" that online gambling could be effectively banned.



The gold medal position on the mid-tier index was taken by Premier Foods, 2.15p higher at 27.9p. Credit Suisse increased its advice to "outperform" in the wake of its final results on Tuesday, and said that the group - which recently announced the disposal of its Quorn and canning units - "should now be able to renegotiate its debt from a much improved position".



Just behind after a surge of 22.5p to 299p, Morgan Crucible issued a bullish prediction alongside its full-year numbers, saying that it plans to double its underlying pre-tax profit by 2013.



DOWN AMONG the small-cap stocks, Mouchel increased 8p to end the day at 138p as Costain said that discussions had been held between the two over its latest approach for the services company. The construction group, which slipped 4p to 240p, made its third attempt last month with a proposal worth £170m.



Among those moving on the Alternative Investment Market was Lo-Q, whose virtual queuing systems can be found in Dollywood as well as a number of other attractions and theme parks. It was 17.5p better off at 145p as its profit after tax increased by over 20 per cent.

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
Sport
wimbledonScot will face Ivo Karlovic next
ebooks
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test