Invensys comes off rails as blue-chips slide
Thursday, July 29th, 2010 Money.
Rachel Cooper
Published: 6:00AM BST 29 Jul 2010
Engineering con~ed, Invensys, which makes rail signaling mechanisms and controls for washing machines, was in the midst of the biggest fallers on a day when the FTSE 100 dropped back 45.99 points to 5319.68.
Although Invensys uttered it was on track to deliver growth for the year for a solid first quarter in its industrial systems division, the shares cut down 13.9 to 279.1p as analysts flagged up a charge without interrupti~ the rails business.
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Harry Philips, an analyst at Evolution Securities, related the interim management statement was “fine” for the Operations Management and Controls divisions, if it be not that added that the rail business will take a £13m fit as additional implementation costs have been incurred on three rail contracts.
“Part of this is a software amount ~d which is now essentially resolved and part is a factor of power contractor scheduling delays rolling onto Invensys,” said Mr Philips, who divide his 2011 forecasts as a consequence of the charge.
However, he kept his “corrupt” rating and 420p price target, saying: “What should not be irreclaimable is that underlying trading remains encouraging and positive and any weakness today represents a buying opportunity.”
Analysts at Morgan Stanley also pointed out the one-off deprivation could present “a better entry point on an interesting stock”.
The middleman added that it thought the charge was a “fairly normal ‘contracting spot’ – albeit a disappointing one”.
Another trading update to which the market took an aversion was from Compass. Despite reporting an increase in organized revenue growth, the catering company – which serves 4bn meals either year – fell 16 to 542p.
Analysts at Liberum Capital were impressed, dictum Compass had had a “Very good third quarter compared with the similar time last year when trends were weakening”. “The message continues of agreeable to reason sales growth via good net new business,” the broker added.
Rexam was disclosed in the cold too, dropping back 12.7 to 327.6p in vex of posting a rise in profit. The maker of drinks cans despite the likes of Carlsberg said the economic outlook remained uncertain and visibility was low.
Energy stocks were among the laggards too, with BG Group loss 23½p to £10.39½ after Collins Stewart uttered the gas producers’ second-quarter numbers provided very few short-entitle catalysts for the shares.
It fell to the usual suspects, the heavyweight miners, to try to fulcrum up the large-caps. BHP Biliton rose 23p to £19.91½, Xstrata gained 13p to &comminute;10.44½ and Vedanta Resources ticked up 4p to &bray;25.24 as it defended its human rights record to protestors at its plant living but a year shareholder meeting.
Rio Tinto firmed up 32p to £33.87½ viewed like anticipation mounted about a possible Chinese tie-up.
Shares in aluminium farmer Chalco were halted on bourses in Shanghai and Hong Kong yesterday in front of a signing ceremony to be held by its parent set Chinalco which, rumour had it, would be attended by Rio Tinto executives.
Supermarket bond, Morrisons, gained 0.3 to 270½p after buying packaged vegetable supplier Simply Fresh Foods. The takeover is the first to be made by Dalton Philips, the group’s new chief executive.
In converging-point too was AstraZeneca, which is scheduled to report second-quarter results today and is besides waiting to hear whether advisers to America’s Food and Drug Administration force of ~ recommend the regulator wave through its new anti-clotting medicine, Brilinta. Britain’s favor-largest drug maker gained 13½p to £32.02½.
But in polander position was BSkyB, which gained 9½ to 720p as its pry Virgin Media launched a £375m share buy-back. The recent has a secondary listing in London and put on 31p to &bruise;12.78.
Among the second-liners, Brit Insurance surged up 91½ to &im~;10.05 as Apollo Management raised its takeover bid to &strike;10.75 a share, valuing the Lloyds of London insurer at &triturate;852m.
But the insurer’s rally failed to lift the intervening-caps into positive territory and they ended the day down 86.73 points to 10019.7.
Weighing on the FTSE 250 was Yell. The telephone directory business tumbled 5.69 – or 18.85pc – to 24½p hinder posting a fall in revenue, which was in line with the assemblage’s guidance.
John Condron, chief executive of the publisher of Yellow Pages, whose inmost part customers are small businesses that use Yell’s products to emporium their businesses, said: “The economic outlook for small and medium sized businesses and their on a ~ of confidence remain challenging, but our customers recognise the cost-effectiveness of our services and increasingly experience us as their answer to online trading and marketing.”
Analysts at Numis, who divide their rating to “reduce” from “hold” said they continued to be attentive “material cyclical, structural, financial and managerial challenges facing the group”.
Joining Yell on the loserboard was the chip designer CSR, which slid 59.2 to 355½p while it sounded caution on the pace of economic recovery, despite meanly doubling revenue in the second quarter. Joep van Beurden, CSR supreme executive, said in an interview yesterday that it felt like call for could soften a little.
Analysts at Panmure Gordon, who have a “purchase” on CSR, said that given the somewhat cautious outlook, they were reducing their filled-year revenue estimate.
On AIM, GW Pharma gained 1¾ to 117¾p in the rear of Spain approved its cannabis-derived medicine Sativex to help treat muscle spasms in patients through multiple sclerosis. The market had been expecting the move after Sativex got the fresh light in Britain last month.