Market Report: Numis tips 888 to be a winner in the US
Tuesday 26 February 2013
Online gambling company 888 looks like a good bet, says Numis, which reckons the company is poised to win big in America. Nevada's governor has legalised online gambling in the state, home to America's gambling capital Las Vegas, and Numis's Ivor Jones reckons other states will follow suit.
"This is another step on the regulatory path which leads to multiple US states being open to regulated and taxed online gambling," Mr Jones said. "888 [is] particularly well placed to benefit from today's news."
The Nevada bill contained a clause slapping a five-year ban on any company that violated the Unlawful Internet Gambling Act 2006, and 888's US rival PokerStars did just that. If other states copy this clause, 888 could make a killing, reckons Mr Jones. The market put its money on him being right and 888 added 3p to 151.5p.
The UK's downgrade from its AAA credit rating didn't do much to dent market confidence, with traders saying most of the reaction had already been priced in. The FTSE 100 index added 19.67 points to 6,355.37.
On the top-flight index, Royal Bank of Scotland was among the day's biggest risers following news that it would spin off part of its American business to raise capital. RBS is expected to announce plans for a stock-market flotation of its US retail bank, Citizens, this year or next when it posts full-year results later this week. The shares added 9.8p to 354.8p.
At the other end of the table, BT had a tough day after Ofcom ruled that the telecoms giant would have to cut the price of its wholesale "leased lines". Businesses, mobile operators and broadband providers lease capacity on BT's lines to transfer data in a market worth £2bn a year, but Ofcom said new rules would "significantly reduce the price" that BT could charge for newer broadband technology. The shares lost 5.4p to 271.7p.
Traders couldn't get rid of Pearson fast enough as the education giant announced a 59 per cent slump in profits. Liberum Capital predicted that the shares have a long way to fall, and made them its top sell. Pearson ended 45p down at 1,171p.
Reckitt Benckiser also experienced a harsh comedown following news that its competitors will be able to make heroin-dependency drugs to compete with the consumer goods group. Reckitt had been trying to slow down competitors' plans to make rival drugs after it lost US patent protection for its heroin-dependency treatment Suboxone in 2009. But regulators called time on its attempts yesterday, and the shares fell 135p to 4,381p.
Despite its recent rebranding and confirmation that it is in "advanced discussions" to acquire Midsummer Place shopping centre in Milton Keynes for a reported £250m, analysts weren't impressed with Intu Properties. Espirito Santo Investment Bank's Michael Burt thinks Intu, formerly Capital Shopping Centres, will try to fund the Milton Keynes deal with an equity placing, covering over a precarious balance sheet, and Espirito maintained its sell rating. Intu fell 8p to 347.3p.
A drive by Vladimir Putin to improve Russians' health is bad news for the FTSE 100's tobacco giants. Mr Putin passed a law on Saturday banning smoking in many public places from June, restricting cigarette sales and banning advertising and sponsorship of events by tobacco companies. Imperial Tobacco and British American Tobacco, who both protested against the law, lost 26p to 2,353p and 25.5p to 3,427.5p respectively.
The plane and industrial parts manufacturer Senior saw its shares soar to a record high, on the back of strong results and bullish predictions for the year ahead. The FTSE 250 company revealed 14 per cent growth in 2012, boosted by its takeover of the commercial aircraft parts maker Weston EU, and said it expects sales to grow by 10 per cent this year.
Despite Boeing's mounting woes over its 787 Dreamliner, Senior said the firm was still manufacturing the lightweight jet, and both Boeing and EADS have backlogs that guarantee a steady stream of business. Senior ended 15.7p up at 237p.
Mid-cap listed Petra Diamonds revealed a rock-solid set of results yesterday, and the shares sparkled up 2.2p to 118p.
But it wasn't all good news for miners. A fire at Daw Mill Colliery on Friday threatens the viability of its operator, UK Coal, according to its chief executive. Shareholder Coalfield Resources' shares fell 0.76p to 5.6p.
Buy: KIRKLAND LAKE GOLD
Snap up Kirkland Lake, Investec recommends, saying the Canadian precious-metal miner is "now at a turning point". The broker adds that while the business has "fared poorly" since last September, a critical part of its expansion has now been completed and Investec thinks it should "finally realise the mine's potential". The shares are 400p but Investec gives a target of 692p.
Cantor Fitzgerald downgrades Bunzl from a "reduce" after full-year numbers were only "a touch ahead of expectations". The broker says the distribution group's shares have outperformed by 8 per cent over the past month but its modest growth prospects mean it does not warrant a premium valuation. The shares are 1225p with a target of 1060p.
Hold: DOMINO'S PIZZA
Here's a stock to savour rather than guzzle: Canaccord Genuity urges we hang on to shares in the nation's favourite pizza maker, Domino's. After yesterday's results, the broker says it remains a "strong believer in the model but notes the slowdown in margin progression". It adds that it foresees "start-up losses up until 2015-16". The shares are 525.5p, and Canaccord gives a target of 500p.
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