Yesterday's trading: Car hire firm hits the skids
Four inches of snow in the South East and chaos on the roads must be good news for Accident Exchange.
But shares of the prestige courtesy car hire firm yesterday hit a skid patch and reversed 57p to 284p on heavy selling.
It followed an unscheduled third-quarter trading statement which blamed, among other things, the driest January on record for hitting rental business.
Founder and chief executive Steve Evans saw his controlling 45.3% stake at one stage drop around £25m in value. Last year's peak was 505p.
AE rents out prestige cars to the drivers of vehicles who have been involved in an accident but are not at fault. Its primary customers are dealerships and it has recently been winning larger ones, like Lookers and European Motors.
Business over the festive period was disappointing with AE left with fleets that were not used and therefore have had to pick up the associated carrying costs.
Rental days have still shown good growth with the 198,000 in Q3 up 28% over Q2 and 64% up on last year. Nevertheless, shop broker Numis downgraded to hold from add and slashed its target price to 330p from 475p.
It also downgraded its 2007 pretax profit forecast to £23m from £25.5m and for 2008 to £30m from £33.4m.
Shareholders who subscribed to October's £12.5m fundraising at 325p must be miffed. They will be hoping the ice and snow hangs around for a week or two so that AE's business can start again to accelerate.
The Footsie bubble was burst by HSBC. Completely out of the blue and less than four weeks away from its annual results, the banking giant warned that bad debts in the US relating to mortgages arranged in 2005 and 2006 would be 20% higher than analysts' forecasts of £4.5bn.
HSBC shed 14p to 917p and the index, which had been hitting six-year highs, drifted to finish 23.1 points lower at 6346.4. HSBC's comments about the US subprime lending market put the wind up Wall Street too and it slumped 91 points in early trading.
It was a shame because a raft of other trading statements from no less than eight Footsie constituents were well received. Traders were also delighted to see the Bank of England, as expected, keep UK interest rates on hold at 5.25%.
Dealers reported some nosy buying of Barclays ahead of the results on February 20 and the close was 3p better at 766p. Punters still dream of a mega bid from the US.
LloydsTSB, which reports on February 23, edged up 1½p to 600p. Scottish Widows disposal talk continues to do the rounds.
Selling on fears it could be relegated from the Footsie at next month's FTSE Steering Committee meeting saw Drax blow a fuse and close 15½p lower at 680p.
It is never going to happen, but a jackanory that Marks & Spencer is weighing up a bid for Sainsbury still prompted nervous selling of the retailer and the close was 11½p easier at 702p.
Life insurer St James's Place raced ahead to 490p and ended 18¼p better at 476¼p amid vague speculation that major shareholder HBOS (4p cheaper at 1131p) is considering bidding for the remaining 40% it does not already own.
Stock market information
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Revived gossip that Iranian entrepreneur Robert Tchenguiz is lining up another offer for the pubs group helped Mitchells & Butlers rise 11½p to 763p. Macquarie and 'friends' bid speculation lifted Forth Ports 31p in a thin market to 2176p.
Amid rumours of more restructuring and cutbacks, struggling music giant EMI shed 4¾p to 241p on hefty turnover of 42m. One fund manager said: 'EMI is going nowhere until Eric Nicoli does everyone a favour and resigns.'
EMI artist Norah Jones' album (Not Too Late) was released last week and has sold 405,000 copies in the US and 60,000 in the UK.
Broker Bridgewell says it is too late for it to make a substantial impact on the company's annual results.
Vane Minerals jumped 2¾p to 17¾p on news of a placing of 1m shares at 15p with Geiger Counter (unchanged at 93p), the world's first specialist uranium investment vehicle.
• An upbeat trading statement helped First Derivatives climb 67½p in a thin market to 332½p. The seller of software systems to the investment banking community confirmed full-year profits will exceed expectations.
Profits have been driven by it securing new customers and an increased take-up of its KX technology database service. Broker Corporate Synergy now estimates 40% earnings growth in 2007.
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