Meanwhile, currency concerns relating to the possibility of renewed QE and a prolonged period of negative real interest rates in the US are likely to drive strong investment demand for gold and silver, said Morgan Stanley.
Xstrata – which rose 46½p to £12.86 – and Kazakhmys, up 56p to £14.83, are the broker’s top picks from the London market.
African Barrick Gold also climbed 22 to 638p as Morgan Stanley raised its price target to 762p from 668p to take into account higher gold price forecasts and the prospect of a re-rating following third-quarter results on October 22, which the broker thinks should restore confidence in the company after the production issues in the second quarter.
Hannah Kirby, an analyst at Morgan Stanley, said: “We expect African Barrick Gold to report that Buzwagi is back on track given the corrective measures put in place at the mine. The resulting July run rates from Buzwagi also suggest that this is the case.”
Overall, the FTSE 100 moved 45.63 points higher to 5681.39 while the FTSE 250 jumped 118.27 points to 10800.23.
British Airlines put on 11½ to 266.1p as Barclays Capital raised its target price to 350p from 320p in the wake of strong traffic figures released earlier in the week.
A JP Morgan Cazenove upgrade to “buy” boosted Capita. The broker argued that near-term risks from public sector spending cuts are diminishing whilst the longer-term opportunities are increasing. The shares were also given a boost by a contract win. The company said it has been appointed by West Sussex County Council as the authority’s IT Infrastructure partner. The seven-year contract is worth £56m. The shares rose 13½ to 792p.
Inmarsat rallied 15 to 644p after Barclays Capital upgraded the shares to “equal weight”, arguing that risks to the company are fully “priced in” the shares.
Tesco benefited from Credit Suisse raising its price target to 500p from 460p. “Our initial big picture reaction to the results and analyst meeting was of a company now emerging from recession (albeit some countries/divisions faster/slower than others) more confident of now delivering higher returns,” said analysts at Credit Suisse. Tesco advanced 9.4 to 440.6p.
Property stocks made it onto the leaderboard as Nomura upgraded the sector to “neutral” from “bearish”. Mike Prew, an analyst at Nomura, said his contrarian forecast of a dip in commercial real estate values is now fully priced into share ratings and should be limited to around 5pc by extraordinarily low long-term interest rates.. Hammerson perked up 10.3 to 412p while Land Securities put on 13 to 676p.
On a less positive tack, Autonomy plummeted 301p to £15.51 after the software company lowered its forecast for full-year revenue by about 3pc. Goldman Sachs took the company off its “conviction buy” list and Numis downgraded the stock to “sell”. Analysts at Numis said yesterday’s statement indicates that product revenue will fall between 10pc and 15pc in the fourth quarter.
Among the second liners, a better-than-expected trading update and traffic figures helped Easyjet take off. The shares climbed 46.4 to 433.3p.
Charter International added 25 to 747½p following news that Thermadyne, a US listed metal cutting and welding products manufacturer, accepted a $422m bid from Irving Place Capital, a private equity firm. Numis advised clients to buy Charter as the broker believes M&A is still a theme for the sector and UK engineering companies are “in play”.
Ladbrokes also gained 1.6 to 136½p despite a Credit Suisse downgrade to “underperform”.
However, De La Rue slipped 12½ to 643p as UBS reiterated its “sell” rating on the stock. UBS analysts said they believe De La Rue will lose part of the India contract gradually over the next two years as suppliers increase capacity and India builds up its own capacity. As a result they cut their forecasts by a further 10pc.
UBS also continues to see downside risk as we do not know the profit contribution from India and expects the reputational damage to linger for quite a period of time.
Gemfields jumped 5¼ to 10½p after full-year results showed soaring emerald sales. The company sold just under $20m worth of the green gemstone, against less than $1m the previous year, as the market for the gems recovered.
No comments:
Post a Comment