The stock has been unsettled since a placing and open offer, falling below the 100p per share fundraising price earlier this month. But Numis, which met with the company on Thursday, remains positive, saying that announcements on debt reduction in late August and November should act a positive catalyst.
The broker, which maintains a "buy" recommendation on the stock, said that improved trading conditions and Punch's success with disposals, coupled with the ongoing bond retirement process, meant that it may end up upgrading its debt reduction forecasts of £900m in 2009 and £400m in 2010.
"Managed pub refurbishment costs are down around 35 per cent and disposals are likely to further exceed expectations," the Numis analyst Douglas Jack said, helping to lure the punters back into Punch.
Overall, the markets remained relatively quiet, with the FTSE 100 easing slightly to 4127.17, down 31.49 points, and the FTSE 250 relaxing to 7184.43, down 49.57 points. The recent loss of momentum was attributed to uncertainties about the strength of any recovery in economic fortunes, with strategists at Cazenove saying in a recent briefing note that "many investors appear to be sceptical about the outlook for economy activity beyond the near term given high debt levels, rising levels of unemployment and tight credit conditions".
On the FTSE 100, the mining sector continued to attract its share of speculators, with traders citing renewed chatter regarding a new bidder for Anglo American, which announced the appointment of a new chairman yesterday. Brazil's Vale was the name in the frame, although market sources remained sceptical. At the close, Anglo was 3.5p stronger at 1654.5p, while Xstrata eased to 597p, down 12.8p.
Further afield, the commercial property group Liberty International closed 0.75p firmer at 382.25p after UBS moved the stock to "neutral" from "sell" on account of valuation. The broker said that at current prices, it continued to favour British Land, which gained 1.5p to 363.5p, but remained cautious on FTSE 250-listed Great Portland Estates, which was 1.5p firmer at 211.5p.
Weaker oil prices bore on the likes of BG, down 1.5 per cent or 15p at 979.5p despite a RBS "buy" note, and Royal Dutch Shell, down 1 per cent or 15p at 1437p. BP, which was the focus of some positive comment from Cazenove, eased to 461.5p, down 3.75p.
Also on the downside, Aviva, down 4.9 per cent or 14.2p at 276.75p, remained weighed down by worries that it may move to cut its dividend. The wider sector was also unsettled, with Standard Life easing to 173p, down 3.2 per cent or 5.7p, Old Mutual declining to 74.88p, down 2.7 per cent or 2.05p, and Legal & General retreating to 49.9p, down 2.7 per cent or 1.39p.
On the second tier, a disappointing trading update undermined sentiment around Bodycote, the engineering group, which fell to 111.75p, down more than 10 per cent or 13.5p. The group warned on full-year earnings, which it said may come in below consensus if demand remains at depressed levels. In response, Panmure Gordon scaled back its target price to 155p from 205p, but stuck to its "buy" stance, saying that higher sequential volumes from September and a lower cost base "should lead to a material turnaround".
Elsewhere, the staffing group Michael Page International fell to 237.25p, down over 4 per cent or 10.2p, after Exane BNP Paribas weighed in, switching its stance to "underperform" from "neutral" in a staffing sector review. The broker was keener on Hays, which was moved to "underperform" from "neutral".
"Hays' earnings are likely to prove more resilient than Michael Page's given its greater exposure to temp staffing (50 per cent versus around 30 per cent for Michael Page), which is more resilient in a downturn than permanent placement," the broker said, adding that, in terms of valuation, Hays, up a penny at 84.75p, appeared relatively "cheap" compared to Michael Page.
Fellow recruiter Sthree pulled ahead of the pack, gaining 6.6 per cent or 11.2p to 182p, after HSBC moved the stock to "overweight" from "neutral", saying that at current levels the shares appeared cheap, especially in light of the dividend yield.
"Sthree at these prices is rendered particularly cheap relative to peers because many ascribe a brand value to peers such as Michael Page, or even Hays," the broker said. "Sthree, with a multi-brand strategy, doesn't benefit from this effect. However, we strongly believe that the real value in such business models is franchise value, not brand, and the discount for lack of brand is erroneous."
Cazenove upped earnings estimates for Computacenter, broadly unchanged at 205p, down 1.5p, which posted a pre-close statement earlier this week. "Earnings momentum now seems definitively upwards, with margin upside due to a shift towards higher-margin services revenues and benefits from the cost reduction programme," the broker said.
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