Market Report: Pressure on AstraZeneca after Pfizer rejection
Thursday 22 May 2014
What next for AstraZeneca? That's the question being asked across the City. The rejection of Pfizer's advances has heaped pressure on management to demonstrate it made the right decision. Analysts are divided: UBS set a bullish £50 price target, while Barclays opted for a more cautious £40 target.
Meanwhile, more major shareholders are voicing concerns. AXA Investment Managers said yesterday shareholders should have been consulted, adding the board was "arguably wrong and acted too hastily". Legal & General also called for the deal to be reconsidered.
It may yet be – whispers in the City suggest US activist hedge funds such as Elliot Associates could be building stakes in Astra, hoping to force it back to the table. The chatter helped AstraZeneca 111.5p higher to 4,420p.
Morrisons tumbled to the bottom of the Footsie, off 4.5p at 205p, after Deutsche Bank urged a "reality check". The bank thinks the recent rally in price has been unjustified, downgrading the supermarket to sell.
Bookies jumped yesterday after online gaming specialist Playtech, up 22.5p at 607p, signalled it could be looking at potential deals. Its chairman Alan Jackson told investors the company's sizable cash pile could be put towards "further value-enhancing acquisitions, joint ventures and partnerships". Ladbrokes added 4.9p to 138.5p, William Hill climbed 8.4p to 334.4p and Bwin.Party put on 5p to 119.1p.
The FTSE 100 recorded its first positive close this week, adding 19.04 points to 6,821.04, helped by rising US markets.
Utility supplier Telecom Plus was the star performer on the FTSE 250, after a 25.3 per cent rise in full-year profit to £44.6m. The company dialled up 149p to 1,519p.
Stobart announced a pre-tax operating loss of £10.2m for 2013. The company, up 1p at 136.5p, last year sold a controlling stake in the trucking business Eddie Stobart, restructuring to focus on infrastructure and support services.
Plexus, which makes wellhead equipment for the oil and gas industry, gushed up 5p to 291p on AIM after signing its first contract in China with Shell.
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