Market Report: Plunge in revenues makes bwin a loser
Wednesday 22 May 2013
The odds were stacked against bwin.party yesterday after a 17 per cent fall in first-quarter revenues. The FTSE 250 gambling group, which is best-known for sponsoring Cristiano Ronaldo's Real Madrid, missed the jackpot with a lukewarm trading update that failed to inspire investors.
The company blamed revenues of £180.2m on a shift in strategy – from "volume to value", as one analyst put it – which sent its shares down 4.1p to 139.2p. Analysts were a little more upbeat and Panmure Gordon reiterated a Buy on the stock, citing expected cost savings of €70m (£59.4m) this year.
"The expected decline in the top line has been offset by cost savings," the broker said. "Regulatory risk has subsided in Germany and the group is well-positioned to capitalise on the shifting US regulatory landscape."
Further up the ladder, shares in Capita reached an all-time high as the outsourcing group closed in on a lucrative 10-year deal with O2, worth an estimated £1.2bn. The company said it was in "final negotiations" to provide customer services for the telecoms group in a move that sent its shares soaring more than 8 per cent to 1025p before they settled at 1005p.
"Capita is now clearly going to deliver strong organic growth through 2013," Espirito Santo's analysts said. The company confirmed it has won contracts worth about £2bn so far this year.
Citigroup was equally bullish: "We view this contract as a strategically important step change in Capita's private-sector market positioning. "Following this contract win, management now expects to deliver 8 per cent organic growth in 2013, ahead of market expectations. In terms of contract phasing, we expect £80m of revenues this year, followed by £150m in 2014 and £150m in 2015."
The news helped London's FTSE 100 build on Monday's highest close since September 2000, edging up a further 48.24 points to 6803.87. The wider FTSE 250 was up 84.53 to 14805.45.
Hamzeh Ajjour, a trader at Capital Spreads said: "With the FTSE 100 breaking recent highs yesterday, it comes as no surprise that it has pushed higher since, as any pullbacks or retracements are gobbled up by investors, leaving shorts wondering if, rather than when, this may turn. In the UK, healthy CPI and RPI data released yesterday coupled with a growing GDP figure in the previous quarter indicate a positive outlook ahead of the new Bank of England governor.
Despite these developments, all eyes will be fixed on Ben Bernanke, the chairman of the US Federal Reserve, tomorrow. He will be stepping in front of congress and the Federal Open Market Committee to address the economic outlook and recent asset purchasing as investors eagerly await any clues or signs of danger."
Among the midcaps, Britain's oldest private-equity group 3i rose 9.6p to 366.6p after completing its latest disposal. The company, which is being restructured by (new-ish) boss Simon Borrows, said it had agreed to sell Xellia Pharmaceuticals to Danish healthcare group Novo.
The sale, which was overseen by investment bank Moelis, will net the group about £143m. Analysts at Investec raised their target price on the company from 278p to 347p, but maintained a Hold rating.
"3i Group reported full-year 2013 results last week and provided the market with an update on the strong progress of the restructuring programme," they said in a note. "Though there should be further net asset value growth to come, we currently see greater value elsewhere in the listed private-equity sector, such as SVG Capital and Electra Private Equity."
Balfour Beatty rose 6.7p to 233p on vague rumours of a sizeable asset disposal to a private equity suitor.
Elsewhere, Legal & General was out and about splashing the cash, increasing its stake above 3 per cent in a host of companies including Bunzl, Debenhams, Greggs and Marks & Spencer.
And finally, Quixant, a gaming and slot machines specialist, joined London's junior Aim market. The company's shares opened up 2.5p at 48.5p before closing at 49p.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 4 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
- 5 Zayn Malik quits One Direction: Hundreds of workers request compassionate leave following band member's exit
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...