Market Report: William Hill on a loser as bookies take online rap
Don't put your money on the bookies, was the advice being given out to punters yesterday. William Hill was left near the back of the pack after it and its rivals were attacked for giving worse odds to gamblers in their shops than those who choose to make their wagers online.
The UK's largest bookmaker finished in the red as City scribblers warned that internet betting would be unable to make up for a lack of growth from their over-the-counter operations.
Saying the bookies are the only ones on the high street which have higher prices than they offer online, Morgan Stanley's Vaughan Lewis claimed this tactic was "unsustainable" thanks partly to the most attractive odds often being advertised on TV.
"We see significant, long-term threats to retail profitability, and see no reason why the ongoing profit declines since 2004 will abate," he added, while also saying expectations for the bookies' overseas potential were too high.
As a result, he changed his advice on William Hill to "underweight", and the bookmaker's shares fell as low as 223.6p in response. Although by the bell the group had made a partial recovery, it was still 4.2p down at 230p while its rival Ladbrokes – which also has an "underweight" rating from Morgan Stanley – slid back 0.9p to 146.3p.
Having risen more than 100 points on Friday to a six-month high, the FTSE 100 managed to keep hold of most of its gains. The benchmark index declined just 8.87 points to 5,892.2 as a supposed deadline for Greece to respond to terms for a new bailout passed, although there were denials that a deadline existed.
The uncertainty was enough for banks across Europe to move back following their recent rally, although Lloyds bucked the trend by shifting up 0.91p to 35.3p after UBS kept it as one of the broker's favourite stocks in the sector.
Market gossips were reviving vague bid speculation around Shire once again, although the drugs group could only climb 19p to 2,129p in response. Not for the first time, Germany's Bayer and US Pfizer were being suggested as possible aggressors, yet traders were highly dismissive of the reheated chatter, which put forward a possible price of 3,200p a pop.
Having enjoyed a strong climb last Friday, investors in Admiral were choosing to take profits as the Confused.com owner was knocked back 39.5p to 998.5p. The car insurer was not helped by Barclays Capital cutting its price target to 959p as the broker's analysts warned the insurance sector was facing "large 2011 losses", while the weekend's snow and its effect on drivers was also casting a shadow.
After reports over the weekend that it was set to pay a significant premium for the proposed merger with Swiss miner Xstrata, Glencore International was left with the Footsie's wooden spoon as the commodities trader slipped 21.8p to 460.75p. Xstrata wasn't doing much better, however, retreating 21.5p to 1,261.5p to bring its three-day winning streak to an abrupt end.
SuperGroup was strutting its stuff on the FTSE 250 after its latest range was given glowing reviews by Oriel Securities.
There have been fears that the retailer's Superdry brand has become too ubiquitous for its own good, but the broker's analysts said the decision to shrink the logos on the new lines "will widen [its] appeal". Going on to add that the chain's numerous distribution issues seem to be behind it, they raised their advice to "buy", which prompted SuperGroup 41p higher to 703p.
Croda ticked up 1p to 1,999p amid hopes that the next reshuffle of the indices could see the chemicals maker become a blue-chip stock. Liberum Capital's Adam Collins pointed out that its current market cap left it with a good chance of gaining promotion, while the analyst also speculated that its fourth-quarter results later in the month could see the group unveil a special dividend.
Elsewhere, Misys – which last week revealed it was in merger talks with rival Temenos – advanced 5.5p to 335.15p as vague rumours that another suitor could emerge with a cash bid refused to go away.
Down on AIM, Gulf Keystone Petroleum was on the rise again, shooting up another 7 per cent to 324.75p which prompted takeover speculation around the explorer to be reheated, while hopes were rising that Total is about to join Exxon in entering the Kurdistan region of Iraq. It was good news for Ashley Kozel, the ex-wife of the AIM-listed group's boss Todd Kozel. She recently received more than 17 million of his shares in Gulf Keystone as part of a divorce settlement, and has already seen them gain roughly £10m since the move was announced last month.
With still no sign of a deal being struck with its banks, troubled Mr Kipling-owner Premier Foods dropped 12.5 per cent to 10.5p on the small-cap index.
FTSE 100 Risers
l Randgold Resources 7,565p (up 165p, 2.23 per cent) Gold digger shoots up after announcing its profits last year rose nearly 260 per cent to $433.4m, with the miner also doubling its dividend to $0.40.
l Vodafone 177.85p (up 2.75p, 1.57 per cent) Telecoms giant advances as merger talks with Greece's Wind Hellas end, while it was revealed over weekend that pharma firm Piramal is buying stake in its Indian unit.
FTSE 100 Fallers
l Antofagasta 1,363p (down 36p, 2.57 per cent) Despite having its price target raised by Canaccord Genuity to 1,510p from 1,465p, the South American miner is one of many in the sector to fall.
l International Airlines Group 186.4p (down 3.3p, 1.74 per cent) British Airways owner loses altitude in the wake of heavy snow causing a number of flights to be cancelled over the weekend.
FTSE 250 Risers
l New World Resources 540p (up 33p, 6.51 per cent) Czech miner rises for the fifth straight day, during which run it has added nearly a quarter, after having seen its share price nearly halved over the previous six months.
l Gem Diamonds 234.4p (up 12.2p, 5.49 per cent) The precious stone producer's push up continues its recent strong performance, having climbed almost 12 per cent in the past four sessions.
FTSE 250 Fallers
l Bumi 795p (down 55p, 6.47 per cent) After last Friday's news that key shareholders want to oust a number of the miner's directors – including Nat Rothschild – Nomura downgrades its rating to "neutral".
l Ocado 103.5p (down 4.8p, 4.43 per cent) In the wake of its huge rise last week, when its share price shot up by a third over three straight sessions, online grocer continues to retrace its steps.
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