Market Report: Morrisons goes on Citi's shopping list

 

Shares in Bradford's supermarket chain were in danger of being left on the shelf after weak results, but yesterday City scribblers said it was time to put Morrisons in the buy basket.

Citigroup's shop experts reckon there are a number of good reasons to like Morrisons, despite the group losing market share to rivals. They think it now has better sales momentum, and a "nice children's clothing offer and [not being involved in] the horse-gate scandal will lift trading momentum" further.

They rate the shares a buy – up from neutral – and were so keen they upped their share price target to 325p from 280p.

Citigroup, one of the few analysts positive about the grocer, think it has the strongest economic model of the UK listed supermarkets and "over the long term we think Morrisons is well-positioned to extend [this model] to southern England where it remains under-represented."

The shares rang up a 9.3p gain to 276p.

Citigroup's view comes after Morrisons reported its first annual profit decline in six years earlier this month. The note also comes as retail expert Kantar Worldpanel revealed that Morrisons' market share fell to 11.7 per cent in the 12 weeks to 17 March, down from 12.3 per cent a year ago.

Investors were cautious as nervousness around the Cyprus bailout deal and wider eurozone issues continued. There was little cheer on the UK economic front as the CBI index showed that sales growth had tapered off but the FTSE 100 index managed to gain 20.99 points to 6399.37.

There was a spate of bid rumours for a number of stocks yesterday – bored traders had obviously decided it was time to spice things up.

Vague talk about Chinese investor interest surrounded Tullow Oil but Investec's Brian Gallagher rates the stock a sell with a 970p. He is concerned about its divestment/farmdown strategy. Tullow has a partnership with China's CNOOC but the extremely vague rumours think an equity deal with Chinese sovereign wealth could be on the cards. The shares were up 13p to 1,251p.

Deutsche Bank claimed oil giant BP is "overlooked and underappreciated" . Its analysts rate the stock a buy with a 520p price target. They think it will continue to trade at a modest discount to its peers ahead of the resolution of the Deepwater Horizon disaster. The shares trickled up 3p to 462.95p.

Rumours of takeover interest resurfaced for the London Stock Exchange, which some traders said was the target of either private equity or Middle Eastern funds, but most played down the rumours. The shares added 28p to 1,320p.

Kazakhstan copper giant Kazakhmys reported huge $2.2bn (£1.4bn) 2012 loss with an impairment charge against the value of its stake in fellow Kazakh miner Eurasian Natural Resources Corp.

Kazakhmys fell 38.3p to 405.3p, while ENRC was buried at the bottom of the index, down 8.1p to 260p. Some speculated the stock could still be subject to a takeover from one of its shareholders but that wasn't enough to help the shares yesterday.

Mid-cap property agent Savills' was down 41.5p to 534.5p after a 7.8 million placing by Credit Suisse.

Bookmaker Paddy Power got a small upgrade from analysts at Goldman Sachs. They raised their estimates and gave the shares a €64 price target and a neutral rating for shares that added €1.17 to €70.17.

Hong Kong's control of London's only trading floor to operate via open outcry has not ended well for shareholders of tech firm Xchanging.

The technology services group has worked for the London Metal Exchange since 2005 but now this lucrative contract is in doubt. In December, Hong Kong Exchanges & Clearing completed its deal to buy LME.

But small-cap Xchanging said discussions have led to the "modification or termination" of its contract which "reflects the change in ownership".

It added that "cost savings in the business combined with other business initiatives will contribute materially to offsetting any loss of profit arising from the modification or termination of the LME contract". However, the shares reacted with a 6p loss to 136p.

Aim-listed transport software supplier Tracsis jumped 9.5p to 184.5p after agreeing to buy traffic analysis and surveys provider Sky High, whose shares were just that on the news – soaring 5.62p to 14.62p.

Buy

EasyJet

EasyJet is ready for take-off, and analysts at Espirito Santo suggest getting on board now. They cite the low-cost airline's increasing presence in Italy – which is Europe's fourth-largest market for air travel – and its increased focus "on higher yielding markets" as indications that easyJet's share price will rise. Espirito Santo's buy recommendation comes with a target price of 1025p lower than the current 1,059p share price.

Sell

Homeserve

Ditch your shares in HomeServe is the advice from Panmure Gordon. They are predicting that there is "an extremely tough ride ahead for investors" in the home emergency insurance provider. An ongoing FSA investigation, losses in its French warranty business, and continued cuts to UK jobs are casting long shadows on HomeServe's future. Panmure Gordon reiterates a 145p target on shares currently 205.5p.

Hold

Avocet Mining

Sit on your stake in Avocet Mining, Investec recommends. The West African gold miner will continue its exploration project in Guinea after securing a debt facility, and has also improved the delivery agreement on its Inata mine in Burkina Faso. Currently trading at 20.25p, Investec sets its share price target at 24.5p for Avocet.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
peopleMathematician John Nash inspired the film Beautiful Mind
News
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
Arts and Entertainment
The pair in their heyday in 1967
music
Life and Style
fashionFrom bathing dresses in the twenties to modern bikinis
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

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine