Market Report: Sports Direct looks an Olympic winner
Like sports fans across the country, Sports Direct is likely to look back on this summer with fondness. The retailer, founded by Newcastle United-owner Mike Ashley, will have been boosted by both Euro 2012 and the Olympics, and yesterday City voices were claiming it judged the latter just right.
"Sentiment-wise, the Olympics have panned out exactly how Sport Direct expected," argued Oriel Securities' analysts, who said the view of bosses "was always that there would be a good degree of British cynicism and apathy before the event, followed by a strong outbreak of Olympic fever once the Games had begun."
Pointing to reports claiming panicking among some retailers had led to "an excess" of discounted London 2012 goods, they claimed the chain "will now be reaping the benefits" of snapping some up of this stock up, while they also highlighted the queues at venues for merchandise.
It is not the first time the scribblers at Oriel, which just happens to be one of Sports Direct's house brokers, have talked up the effects of this summer – back in June they said Euro 2012 plus the Olympics had presented "a golden opportunity for [it] to endear itself to sporting customers".
Yesterday, they were also optimistic over the possibilities for the group online and overseas while claim ing an upcoming analysts' trip to its distribution centre would leave them "impressed". Investors were not, however, with the stock moving back 2.6p to 302.4p, although it had added nearly 8 per cent over the previous six sessions.
The FTSE 100 was also in a post-Olympics slump, with the blue-chip index shifting back 15.23 points to 5,831.88 following disappointing GDP numbers from Japan as traders once again bemoaned the lack of activity.
Petrofac's first-half numbers may have come in ahead of expectations, but that didn't stop it finishing the day in the wooden spoon position. Ignoring the fact the oil services company had made a net profit of $325.3m (£207.3m) over the six months, investors instead focused on boss Ayman Asfari's admission that the awarding of numerous contracts were being pushed back until 2013.
That prompted Oriel to keep its "reduce" rating, citing "the relatively poor visibility over medium-term forecasts". Liberum Capital's analysts, however, reiterated their "buy" advice, although Petrofac nonetheless finished 81p worse off at 1,486p.
Whitbread was in need of a pick-me-up, with the owner of Costa Coffee knocked back 40p to 2,110p after being hit by a downgrade from Deutsche Bank. Geof Collyer, an analyst at the broker, cut his "buy" advice to "hold", saying the fact the stock has added around 50 per cent in the past 12 months "suggests that the shares have caught up with a reasonable degree of the best parts of the story".
One of the day's main risers was G4S, which climbed 1.8p to 264.3p. With the outsourcer donating £2.5m to troops in the wake of its London 2012 failings, UBS scribbler Jaime Brandwood said that the focus of its half-year results, due out later in the month, would be "on any Olympics fall-out" and added a decision on whether it has won prison contracts, due in October, was one of a number of upcoming events that "should add further clarity on any reputational impact on G4S".
Elsewhere, United Utilities could only edge up 1.5p to 689p as vague speculation the water group could be a potential bid target continued to do the rounds – not a fresh idea.
Since announcing in 2009 it had signed an option agreement with a US giant, Byotrol has kept the identity a mystery. However, yesterday the hygiene technology company not only revealed the mystery corporation as Kleenex-owner Kimberly-Clark but also said the two had struck a full licensing agreement as Byotrol shot up 1p to 6.88p on Aim.
Bollywood film group Eros International was proving to be one of the stocks to watch. It ticked up 8.5p to 197p after unveiling figures from its Indian unit showing a 60 per cent jump in revenues over the first three months of the financial year.
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