Market Report: 'Radical action' is needed at Unilever to reach Liberum's target
Thursday 05 December 2013
The City had its eye on the break-up of consumer goods giants yesterday as Unilever and Reckitt Benckiser were in the spotlight.
Ice creams-to-soap group Unilever was the subject of musings from Pablo Zuanic at Liberum Capital when he stated it will take a "high profile shareholder activist to unleash" value there. Unilever is due to hold an investment seminar today and Mr Zuanic warned "radical hands-on action" was needed to reach his target price of 2,900p. But Unilever was unmoved at 2,418p.
Meanwhile analysts at UBS cautioned that the possible sell-off of the pharmaceutical arm of the Cillit Bang-to-French's Mustard consumer goods giant Reckitt might not raise as much as hoped. UBS said the valuation is "much greater" than is "likely to be released" if they sell it. UBS issued a double downgrade – rating it Sell – and warned risks to profits of the arm after 2016 are "being overlooked by management". UBS reduced its price target to 4,550p as Reckitt slipped back 49p to 4,816p.
The wider market continued its losing streak and finished the fourth day on the trot in the red. The FTSE 100 lost 22.46 points to 6,509.97.
Banks were out of favour after EU fines for Libor fixing. Barclays declined 3.4p to 262.8p while a shock profit warning pushed Standard Chartered to the bottom of the blue-chip index as it lost 92.5p to 1,338.5p.
Supermarket group Tesco spent the past few weeks warning the City its sales growth would be weak and analysts followed by issuing downgrades. By the time it announced its third quarter results yesterday the 1.5 per cent decline in sales was expected and Tesco edged down just 1.6p to 340p.
Vague chatter about telecoms takeovers focused on TalkTalk as some speculated it might be in the sights of larger rivals such as EE or Vodafone. Others suggested the rumours were nonsense but the stock still dialled up a 6.1p gain to 269.8p on the mid-tier table.
AIM-listed fuel technology specialist Velocys, previously Oxford Catalysts, got the attention of buyers and volume went through the roof as it added 5.25p to 157.5p.
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