Market report: Tuesday close
THE recent sell-off in shares of online poker player PartyGaming provides eagle-eyed investors with an opportunity to buy on the cheap.
That, at least, is the conclusion of broker HSBC, which has raised its rating on the shares from neutral to overweight and set a target price of 144p. PartyGaming closed ¼p lower at 105¾p.
HSBC points out PartyGaming's price has fallen around 30% since early May, hitting a low for the year of 106p yesterday, and that the valuation is now looking 'attractive'.
Last month's large-scale sale of shares by directors and founding members at 116p - the equivalent of last year's launch price - has damaged sentiment, along with US moves to outlaw online gambling.
Brokers have warned that measures being considered by the House of Representatives would slash earnings of companies such as PartyGaming, Sportingbet, down 16¼p at 331p, and Empire Online, 1¼p better at 81½p.
The Bill before Congress seeks to ban the use of credit cards to pay for online bets. Almost all the companies affected would be based outside the US, although half their customers in the £6.5bn industry live within the country.
The House of Representatives reconvenes later today with just eight weeks left to push the Bill through. Brokers such as Numis Securities say the chances of achieving this appear 'very slim'.
Share prices generally continued to trade within a narrow range, with investors unable to glean any overnight comfort from a Wall Street which seemed to run out of steam before its close. This followed a sell-off of big technology companies amid fears of a slowdown in earnings growth.
Once again, turnover in London fell short of desired levels. By midday, the total number of shares changing hands had failed to reach abn. The FTSE 100 index fell 39.6 to 5857.3.
Investors found a glimmer in the latest trading update from Marks & Spencer, up 2p at 585p. Broker Credit Suisse has tweaked its profit forecast 2% higher, to £910m for the current year, and by 3% to £920m for next year. It is sticking with its outperform rating and 580p target.
Rival Seymour Pierce also rates the shares at outperform and has raised its sights 10p to 640p. Outgoing M&S chairman Paul Myners has bought a further 25,000 shares at 583p and now owns 303,741.
Smith & Nephew, the hip-and knee-replacement maker under investigation in the US over suspected price fixing, has splashed out $72.3m (£39.2m) for Texas firm OsteoBiologics, which specialises in bone and cartilage repair materials.
S&N, 2¾p cheaper at 400p, expects the purchase to reduce earnings by $7m in the second half of 2006 and be 'broadly neutral' in 2007.
Bus and train operator Go-Ahead fell 36p to 1865p after the shock news that chief executive Chris Moyes is leaving due to ill-health. Widely respected Moyes, a founder of the company, had been in the top job for just 18 months. He will be replaced by longtime rail boss Keith Ludeman.
SIG sported a rise of 45p at 910p on the back of a bullish first-half trading update. The supplier of insulation, roofing and commercial interiors reported said pre-tax profits for the period were expected to come in at £49m, up from £40.5m last time, with like-for-like sales in all three of its main geographical areas expected to top £885m, an increase of 15%.
Broker Panmure Gordon promptly raised its rating from hold to buy with a target of 1020p. Another broker, Bridgewell Securities, said the group is clearly in excellent shape but its share price already reflects the good news. Bridgewell rates the shares neutral.
Business Post firmed 4p to 437p following its AGM statement. The group, hit by several profit warnings, is offering shareholders signs of improvement. Brokers say the share price will be underpinned to some extent by last week's bid for rival DX Services, unmoved on ½p lower at 412½p.
Victoria Oil & Gas rose 3p to 94p. Managing director William Kelleher has bought an extra 54,400 shares at 91p, stretching his holding to 4.46m (3.87%). Fellow director Kevin Foo has bought a further 32,000 shares at 93p each, and now holds 2.94m shares (2.55%).
Taylor Nelson Sofres fell 10p to 171½p after US investment bank JPMorgan slashed its target price on the market research specialist from 277p to 216p in the wake of last week's profit warning.
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