News Column

UK WINNERS & LOSERS: Pearson, William Hill Lead Blue-Chip Gainers

April 25, 2014

James Kemp

LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices midday Friday.




Pearson, up 3.8%. The publisher has maintained its full-year adjusted earnings per share guidance for 2014, as it said it had seen a "solid start to the year" in a statement ahead of its annual general meeting Friday. The company, which is merging its Penguin books unit with Random house and sold its Mergermarket business last November, continues to expect adjusted earnings per share of between 62 pence and 67 pence in 2014, taking into account continued cyclical and policy-related pressures in the US and UK, its restructuring plans and product investment. In the first quarter to end-March, sales rose 2% at constant exchange rates, 1% on an underlying basis, to GBP900 million excluding Penguin and Mergermarket.

William Hill, up 2.3%. The bookmaker is up despite reporting a 14% drop in its first-quarter operating profit as football results at the beginning and end of the quarter went heavily against it. Although Numis analyst Ivor had not been expecting such a sharp increase in the company's share price, he notes that there are some encouraging figures within the release. The group reported a 7% increase in group net revenue, with Sportsbook amounts wagered up 39%. With such a large increase in the amounts wagered, "if you believe that sporting results were abnormal, this is a positive," says Jones. At the same time, William Hill announced that it will close 109 loss-making betting shops before the end of the year, in a bid to maintain profits, in response to the UK government's decision to increase the tax rate on high-speed, high-stake gambling machines next year.

Burberry Group, up 1.2%. Berenberg has raised the luxury fashion designer's price target to 1,550.00 pence, from 1,500.00p, to reflect its "best-in-class" online offering, which it estimates to have added an incremental 2% like-for-like sales growth during the second half of its 2014 full year, and continued sales outperformance in Greater China, countered by lower sales and earnings compound annual growth rate estimates of 7.2% and 4.3%, respectively, for 2014 to 2017.

BP, up 1%. Jefferies has initiated BP at Buy, with a 570.00 pence price target, saying that the company has progressed well since the Macondo oil spill and that the company's cash flow generation is now "at an inflection point". The investment bank believes that BP offers a "good valuation trade-off to investors". It trades at 9.2x Jefferies' 2014 earnings per share estimate, which equates to a 22% discount to its international oil company peers.




Tullow Oil, down 2.4%. The independent oil and gas firm said it is abandoning its Tapendar-1 exploration well, offshore Mauritania. It said the Tapendar-1 exploration well in the C-10 licence, offshore Mauritania - the second exploration well in its Mauritania campaign - has not encountered hydrocarbons and the well is being plugged and abandoned.

AstraZeneca, down 1.9%. The pharmaceutical company, which has seen its share price jump sharply in the last three days, is a big faller despite a slew of positive price target revisions. S&P Capital has raised its price target to 4,460.00 pence from 3,800.00p, Bernstein has increased its target to 4,106.00p from 3,727.00p, and Deutsche Bank has lifted its price target to 3,800.00p from 3,600.00p. However, after the company's share price over 10% in the last three days, AstraZeneca has fallen Friday.




Ophir Energy, up 2.7%. UBS has upgraded the oil and gas exploration company to Buy from Neutral, saying that the group is "down, but not out". Ophir shares have suffered a tough 18 month period, with its shares down almost 60%, after high profile dry-holes in Tanzania and Gabon, negative revisions to the exploration portfolio, and failure to deliver on promised farm-outs. However, while the stock is "deeply out of favour", UBS believes it is "too deep".

Cable & Wireless Communications, up 0.9%. The group said it has agreed to sell Compagnie MonÉgasque de Communication, the holding company for its 55% stake in Monaco Telecom, in a deal worth EUR321.8 million. Monaco Telecom is the incumbent operator in Monaco where it is the market leader and only full service telecommunications provider. It is selling the business to a private investment vehicle controlled by French entrepreneur Xavier Niel. Cable & Wireless acquired its 55% stake in Monaco Telcom in June 2004 for EUR162 million.




Sound Oil, up 33%. The oil and gas company said a new institutional investor is to inject GBP14.0 million into the group, with the funds earmarked for its drill programme for the next year. It said Continental Investment Partners SA will inject the GBP14.0 million at an average price of approximately 9 pence per share, which represents almost a 70% premium to Thursday's closing share price, subject to due diligence and contract. Sound Oil added that it is making progress on potential farm-ins.

Iofina, up 28%. The iodine exploration and production company's shares took back a portion of their losses suffered earlier in the week on its full year earnings report Friday. Iofina said its pretax loss widened in 2013 due to higher expenses but noted that production has seen a vast increase in its first quarter 2014 helping the company to exceed its revenue targets for the three months. Iofina said it produced 47 metric tonnes of crystallised iodine, almost a three-fold increase on the same period the previous year which has meant its realised revenue has exceeded the company's target for the quarter. Iofina shares had fallen by more than half on Wednesday after it reduced its production forecasts for the year to "materially below current market expectations" due to its principal operator's planned fracking schedule for the next three months.

Aukett Swanke Group, up 11%. The architectural and interior design firm said that group revenue and profits for the current financial year will beat expectations, boosted by an improving UK property development sector. The company, formerly called Aukett Fitzroy Robinson Group, said it is expecting improvements to continue in the UK property development sector through the remainder of the year ending September 30 and into the following year. It said the improving environment has driven growth in its UK business, boosted by new commissions won and existing commissions continuing into their later project stages at a higher rate than was previously expected. Aukett Swanke also said that the integration of its newly acquired business, Swanke Hayden Connell Europe, is proceeding as planned.

1Spatial, up 10%. The information technology software company said that its full-year results would be in line with market expectations for the year to end-January, as it saw a "solid" performance over the year. It said that it entered the new financial year with an order back-log of over GBP7 million, and a "significant pipeline of opportunities."

Straight, up 6.1%. The group, which makes containers for waste and recycling, water saving and composting, said that takeover talks with One51, an investment company that owns a portfolio of businesses in environmental services, renewable energy and injection moulding plastics, have been extended until May 2. It said One51 must either make a firm intention and make an offer or not. One51 was originally granted an extension on March 14 until April 11.


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Source: Alliance News