Market Report: Punters were in unforgiving mood after Perform's shock profit warning
Friday 13 December 2013
A shock profit warning from the sports marketing group Perform sparked a red card from the City as the shares collapsed by more than 57 per cent.
The FTSE 250 media group – which makes money selling video clips of sports events to websites, newspapers and bookies – stunned investors with the warning just before midday yesterday. It said earnings would be as much as 6 per cent below expectations this year and blamed difficulties in display advertising. Punters were unforgiving and the shares fell 247p to 180p.
Joint chief executive Oliver Slipper said he was "disappointed with the performance" and analysts at Jefferies said the profit warning was a "real knock to management credibility". Jefferies also conceded that the share crash was the "buying opportunity we had been waiting for – but not for the faint-hearted".
For the wider market, the long-promised "Santa rally" has yet to materialise. The FTSE 100 is down 2.15 per cent so far this month and Ashraf Laidi, chief global strategist at spread-better City Index, said it is on track for "its first declining December since 2002". The index dropped 62.47 points to 6,445.25 as traders remained fearful that next week's meeting of the US Federal Open Market Committee could include an announcement to start tapering quantitative easing.
The biggest faller was the retailer Sports Direct, down 97p to 674p as it missed analysts' expectations for the half year despite posting a 17 per cent rise in underlying profits to £146.2m.
Defensive utility stocks were in favour and United Utilities flowed up 11p to 655.5p.
The energy services group John Wood Group declined 79p to 718p – one of the worst fallers on the mid tier – after warning on profits.
The AIM-listed iron ore producer London Mining dug down 10.5p to 99.75p when it revealed it would not meet its full-year production and sales guidance. But analysts at Investec said it was just a "production hiccup" and rated the company a buy.
Green Dragon Gas roared up 5p to 275p after it agreed a deal with PetroChina for a project in the country.
The miner Kirkland Lake Gold tarnished 12.5p to 135p after reporting a second-quarter loss, but said grades of gold would improve.
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