Market Report: Whitbread starts to feel pain but the call is 'buy'

As investment decisions go, buying into a company just as it admits that trading is on the wane may seem counter-intuitive. Yet that is exactly what punters were being told to do with Whitbread yesterday, despite the Costa Coffee owner's disappointing figures earlier in the week.

Amid the constant torrent of doom and gloom surrounding consumers, Whitbread has been held up for a while as one of the few names seemingly able to avoid the woes being suffered by its neighbours on the high street. However, earlier in the week cracks finally started to appear, with the leisure giant admitting its sales growth had slowed.

Since then, it has been rather unloved in the Square Mile. Yet last night it turned a corner, rising for the first time since the update as it pushed up 20p to 1,528p. The gains came after HSBC put itself firmly in the group's corner, not only telling investors to stop being hasty but also claiming that — if history repeats itself – this could provide a perfect buying opportunity.

To support her stance, the broker's analyst Lena Thakkar pointed to when it last flagged up a slowdown in growth back in 2009, saying that it actually turned out to be a "buy signal". She highlighted that, despite Whitbread's like-for-like sales staying negative for a number of months, at the same time its share price steadily rose after the initial fall.

As a result, Ms Thakker kept her "buy" rating and predicted that – despite the update – it would "continue to outperform its industry peers", although she did cut her target price from 1,900p to 1,800p.

The FTSE 100 was still yo-yoing, moving in the opposite direction to the day before for the sixth successive session. It jumped up 34.05 points to 5,400.85, shifting off a two-week low, although a decent Spanish bond auction was countered by mixed economic data from the US and signs of further discord over the eurozone deal reached in Brussels last week.

Old Mutual led the way, jumping up 12.7p – or 11.44 per cent – to 123.7p on news it had managed to sell its Norwegian operations for $3.2bn. With the move raising the possibility of further deals in the insurance sector, peers Admiral and Aviva were also better off, shifting up 13.5p to 800.5p and 0.5p to 288.3p respectively.

X Factor broadcaster ITV, meanwhile, was bumped up 1.35p to 62.35p after Ofcom revealed it was not going to recommend a full inquiry into the television advertising market. Panmure Gordon's Alex DeGroote said the news "may remove some of the regulatory discount" around the group, although traders were more interested because of their belief it looks cheap.

At first it seemed as if Hargreaves Lansdown was heading for a day in the red, with the investment fund giant slipping back to 414p. Yet despite having its rating downgraded by Citigroup's Haley Tam to "neutral", with the analyst saying it would be hit next year by a low appetite for risk among investors, the group finished 13.5p better off at 434.9p.

Another stock behind in early trading was Burberry, which slipped as dealers awoke to data from China – a key region for the upmarket brand – showing further signs it is being affected by the West's troubles.

However, by the bell it had shrugged off the numbers to edge up 9p to 1,148p, even as JPMorgan Cazenove berated the market for being too optimistic over the luxury goods market's outlook for 2012.

At the less high-end side of the retail sector, there was yet more bad news on the high street from the latest ONS sales figures for November showing a 0.4 per cent drop. Still, while JD Sports Fashion was knocked back 7.39 per cent to 570p, meaning its share price has retreated almost 19 per cent over the last week, at the other end of the FTSE 250 Carpetright managed to shoot up 40.1p to 477.5p.

The unwanted title of being the mid-tier index's biggest loser went to International Personal Finance. The emerging markets lender confirmed analysts' worst fears by saying its profits would be significantly hit by recent foreign exchange changes, prompting it to slump 9.24 per cent to 165p.

They say bad news comes in threes, and so it proved for Pursuit Dynamics yesterday. The AIM-listed technology developer left more than a few investors rather ashen-faced and nursing burnt fingers after it revealed not only had its full-year losses increased to £15.3m but that it was also launching a rights issue.

On top of that, it announced its chief executive Roel Pieper had decided to resign, all of which resulted in its share price losing a whopping 54.24 per cent, as it dropped 110.25p to 93p.

Elsewhere, Zoltav was still catching the attention of traders as they continued to speculate over the possibility of stakebuilders in the resources company, which moved 0.25p to 4.45p.

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