Market report: Tuesday close
US broking house Goldman Sachs expects Emap to make all the right noises when it comes out with a trading update on Friday, which is strange because the rest of the City is expecting gloomy news from the magazine publisher and independent radio broadcaster.
Goldman's comments lifted Emap 19p to 741p today although it remains well below its year's high of 950½p after warning shareholders about revenue growth in July.
The broker has, however, raised its rating from neutral to buy and jacked up its target price from 761p to 816p, saying the group is likely to outline plans on Friday designed to tackle overriding problems within its consumer magazines division.
These will include moves to slash costs in an attempt to preserve margins. Savings are forecast to reach £12m a year by 2012, thereby providing a positive trigger for the shares.
Only last month, Emap announced the sale of its troubled French business for £285m and pledged to give the proceeds back to shareholders in the shape of a special dividend.
Elsewhere in the media sector, Reuters firmed 4p to 436½p after Goldman removed the shares from its pan-European buy list. The broker has also downgraded from buy to neutral saying the price was now looking fully valued. At this level, Reuters looks vulnerable to any shift in the investment banking environment, or increased competition.
Share prices generally drew encouragement-from a positive performance by the Dow overnight on Wall Street and a rally by commodity prices. The FTSE 100 index rose 75.3 to 5873.6.
A two-way pull persists in shares of luxury cruise line operator Carnival, up 18p at 2452p. Just a week after US broker Morgan Stanley placed 5.6m shares at around 2565p, rival broker Credit Suisse has placed a further parcel of 1.7m shares at the 2435p level. It occurred just hours after Swiss broker UBS began coverage of Carnival with a buy rating and 2800p target.
Takeover talk in Hanson is gathering pace. Shares in the building products supplier jumped 42½p to 730p as talk that a Dubai-based consortium was prepared to offer up to 840p a share continued to gather pace. One trader commented: 'There is no smoke without fire'. But others say the asbestos claims in the US remain outstanding problem and that Hanson's rivals are achieving higher levels of growth.
Mining shares staged something of a rally, bolstered by dearer prices for metal and oils. But broker UBS has adjusted its price for iron ore, having previously looked for an increase of 10%. It now forecasts a decrease of 5%.
It has cut its price target for Rio Tinto, up 51p at 2403p, from 4200p to 4100p, BHP Billiton, ahead 18p at 871p, from 1600p to 1550p, and Anglo American, 50p better at 2110p, from 3100p to 3000p. It continues to rate all three a buy.
Supermarkets group Wm Morrison firmed 7½p to 251½p after US broker Lehman Brothers repeated its neutral stance but lifted its target price from 210p to 296p.
Aim-listed Judges Capital celebrated a big leap in half-year profits and a maiden dividend with a rise of 1½p to 96½p. The scientific instruments group reported pre-tax profits up from £12,000 to £122,000 and a first-time payout of 1p with the board confident of satisfactory results for the full year.
Also on Aim, Newfound was making its debut following a reverse takeover of former cash shell Nettec. Newfound develops upmarket holiday resorts in Canada and the Caribbean and has raised £16.7m by way of a placing at 65p. The price touched 69½p before settling at 66½p.
Flat sales of Bisto gravy mix will have an adverse impact on first-half profits at food group RHM, down 12½p at 271½p. That was the message for shareholders at the AGM. The hot summer also saw sales of Sharwood's Asian sauces, Robertson's jam and Paxo stuffing suffer. Rising wheat costs and a bigger spend on marketing meant that profits would be skewed towards the second half.
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