Market Report: Superdry is back in fashion with traders

 

Take a cursory glance around any high street and you'd be forgiven for thinking that the clothing brand Superdry had reached saturation point. But SuperGroup, which owns the brand, was back in fashion yesterday, as traders reacted positively to its new autumn/winter ranges.

Canccord's Wayne Brown said the diverse uses of the brands logo meant it could appeal to a wider audience than competitors and noted that: "The women's range is now looking significantly more advanced."

Mid-cap listed SuperGroup has suffered a series of setbacks in the past 18 months, including three profit warnings and stock issues that left its shares not just 80 per cent below its 2011 peak, but even below its 500p-a-share float price. However, analysts are getting optimistic again. In December the group reported a 3.9 per cent rise in like-for-like sales during the six months to October and City scribblers hope the group's third-quarter update on 7 February will show strong growth internationally. SuperGroup added 34p to 580p.

After starting the week with a roar, the top-flight index ended it with a murmur. US influences dominated, with two big sellers of futures contracts on Wall Street's benchmark S&P 500 index spooking investors on Friday morning, according to London market watchers. The FTSE 100 was flat for most of the day, before getting a midday boost from Wells Fargo, which kicked off the bank-reporting season in the US with a 24 per cent jump in earnings. The UK's blue-chip index ended up 20.07 points at 6121.58, the first time it has closed above the 6,100 mark since May 2008.

The biggest riser was British Airways and Iberia owner International Consolidated Airlines Group (IAG). UBS rated the stock a buy as it reckons the group's Iberia restructuring will reap rewards and predicts IAG will outperform in 2013. IAG added 10.7p to 206.62p.

Aviva's restructuring is also paying off, as Citibank joined Investec in rating the insurer a buy. Citi's Paul Bradley said: "Although Aviva has enjoyed a good run recently, it remains cheap relative to peers. The progress made on its restructuring plan gives confidence that the management can close the valuation gap." Aviva gained 12.1p to 378.88p.

Elsewhere on the blue-chip index, commodity companies were lacking in popularity. Rio Tinto, BHP Billiton and Anglo American were all among the day's biggest fallers, as Chinese inflation figures and news that cyclone Narelle could hit the key mining regions of Western Australia this weekend left investors wary of the sector.

But yesterday's worst performer among the top flight was Tullow Oil, which announced write-offs of $670m (£415m) for the second half of 2012, due to dry holes and licence relinquishments off the African coast. Tullow dropped 39p to 1169.08p.

Commodities' unpopularity was not shared on the mid-cap index, where the gold miner Centamin was top of the table. Egypt's petroleum minister, Osama Kamal, sent shares soaring after he lent his support to the company in a TV interview. Centamin has faced a series of problems with government agencies in the country since October, with courts questioning its right to produce at its Sukari mine, customs officials holding up exports and even the petroleum ministry disrupting fuel supplies. Its shares closed 4.6p up at 55.8p.

Meanwhile, the bus and rail operator FirstGroup had a dismal end to the week – the Brown report into the West Coast Railway fiasco this week contained damning criticism of the Government's decision to award FirstGroup the franchise and called for a serious overhaul of the system. UBS downgraded FirstGroup from neutral to sell and the company's shares fell 4.8p to 195.1p.

Despite MoneySupermarket.com admitting the Bank of England's Funding for Lending scheme meant "lower demand for comparison of savings products" yesterday, more switchers clicking on its insurance and travel links mean the comparison site reckons it will see revenues rise by 15 per cent to £204.5m in 2012. Canaccord Genuity's analyst Simon Davies said the company was "recession-resilient" and raised his target price to 200p from 147p. It put on 9.7p to 167.9p.

Buy

JD Wetherspoon

Fill your boots with Wetherspoon shares, Panmure Gordon urges. The broker says it is expecting the bargain pub landlord — due to issue an update on Wednesday — "to report continued market leading performance with a fairly strong Christmas and New Year". Shares presently are at 515.5p but Panmure gives a target of 615p, saying the "momentum is firmly with Wetherspoon".

Hold

Dixons Retail

Keep your shares in Dixons Retail, is the advice from Espirito Santo. The electronics chain is releasing a trading statement next Thursday, and the broker's analyst Caroline Gulliver is expecting like-for-like sales for its third-quarter to have jumped 6 per cent. Yet, despite saying that she believes the company is heading for "significant growth ... over the next two years and see risks to the upside", Ms Gulliver keeps her "neutral" recommendation and 30p price target, with shares currently at 27.74p.

Sell

J Sainsbury

Seymour Pierce has downgraded Sainsbury's from Hold to Reduce. It says the supermarket chain's third-quarter numbers last Wednesday "were not as strong as hoped" and it feels the business "will struggle to outperform this year". Shares are 324p; Seymour gives a target price of 310p.

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