Market Report: Takeover gossip keeps Ferrexpo on a rich seam
Friday 29 April 2011
As rumours continued to swirl that a bid approach could be around the corner, Ferrexpo maintained its advance up the mid-tier index last night after investors were told to bet on its long-term potential.
The miner shifted forwards 25p to 499p, meaning its share price has gained more than 17 per cent in just six sessions of trading. Takeover speculation has played a part in this, with Vale and Rio Tinto – 25.5p ahead at 4,360 – among the names rumoured to be potentially interested, and the chitter-chatter was reheated by market gossips again yesterday.
Ferrexpo was also driven forwards by Seymour Pierce after the broker initiated coverage with a "buy" recommendation and a target price of 569p. As well as citing the strength of iron ore, its analysts said that "with sizeable production increases in the medium- to long-term and one of the largest unexploited iron ore resources in the world, much of Ferrexpo's true value does not reside in its near term earnings".
With the market preparing for the second consecutive four-day weekend, the FTSE 100 managed to crawl up a mere 1.74 points to 6,069.9, drawing to an end a severely curtailed trading week in which the top-tier index increased 51.6 points.
The results continued to come in thick and fast, with Standard Life climbing 7p to 226.1p as the insurer's sales for the first-quarter reached £5.8bn. Nearly £1bn above expectations, the news helped its peers, and Legal & General and Aviva jumped up 3.4p to 122.8p and 4.8p to 446.8p respectively.
At the other end, AstraZeneca was left deep in the red, sliding 107.5p to 2,990p after the drugmaker's sales figures disappointed. It was not helped by its French peer Sanofi-Aventis also revealing its earnings had taken a knock, while Shire was another faller – moving 51p to 1,850p – despite announcing expectation-beating numbers for the first three months.
However, GlaxoSmithKline managed to buck the downwards trend, maintaining its surge following Wednesday's results by putting on 19p to 1,305.5p as both Natixis and Bernstein increased its target price.
At the bell, the pole position on the FTSE 250 was occupied by Spirent Communications after the telecoms testing equipment-developer spurted forwards 11.3p to 146p. Market voices pointed to the US for the catalyst, where the mobile-phone giant Sprint Nextel revealed record new subscriber levels.
As Micro Focus charged up 13p to 371.5p, the bid spotlight was still on the software company, following its announcement on Tuesday that it had received an approach. With the private equity group Bain Capital reported to be about to make a bid worth up to 450p-a-share, vague speculation continued to spread that both Hewlett-Packard and IBM could be among those also considering a move.
Telecity stayed at 525.5p, despite Royal Bank of Scotland saying the acquisition by the US's CenturyLink of the data centre and hosting company Savvis was "evidence that multi-tenanted outsourced data centres, such as those Telecity operates, are increasingly viewed as strategic assets".
Reiterating the telecoms group's "buy" rating, RBS added that while "we do not anticipate any imminent further merger and acquisition [activity], we believe it will remain a feature of sector valuations for the foreseeable future", and kept its "buy" advice.
There was plenty of cheer for JD Wetherspoon, which was lifted 17.2p to 454.8p ahead of its update next Wednesday. Citigroup reiterated its "buy" recommendation in a positive note on the pub and restaurant sector in which the broker said sales growth appeared to be returning.
"Contrary to expectations that UK consumers would be cautious in the early part of this year... it appears that the right offer will tempt consumers to spend," said its analysts, who also increased Greene King's target price to 570p, helping it edge up 2.6p to 489.6p.
Croda International rose 108p to 1,881p, after the speciality chemicals group revealed its pre-tax profit for the first quarter had increased 40 per cent, despite the price of raw materials seeing a rapid rise.
Others in the sector were up as well, including AZ Electronics Materials – which also benefited from the return of vague bid speculation – and Victrex, and the two increased 10.3p to 281p and 69p to 1,473p respectively.
Meanwhile, Premier Foods finished 1.43p ahead at 32.17 as the owner of Bisto gravy revealed its chief executive Robert Schofield is retiring. Guardian Stockbroker's Atif Latif noted that rumours of such a move prompted a rise last week, and said its "equity case looks positive with this change".
Yell shot up 0.5p to 7.13p on the small-cap index after the Yellow Pages publisher made an early debt repayment. The group's financial issues means it has dropped nearly 90 per cent of its share price in over a year, resulting in the group falling to penny stock-levels.
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