Market report: Monday close
Shares in Shire raced to the top of the leaderboard today with a jump of 44½p to 841½p, after Goldman Sachs reminded clients this is not just a one product drugs company.
Movers: Latest from the stock exchange
Goldman has raised its rating from neutral to buy with an unchanged target of 1015p, and complains that most of the focus of attention has been on the group's Vyvanse treatment for attention-deficit disorder. The rest of its valuable portfolio is still overlooked.
Prescription share gains for Vyvanse have fallen short of consensus expectations, leading the shares to underperform the rest of the drugs sector by 23%. But the current share price indicates not only that Vyvanse will fall short of guidance but that market-share gains beyond 2008 are also limited. The broker expects share gains to accelerate in the second half of 2008 following the launch of Vyvanse for adults.
Shares generally ticked better despite Friday's sell-off on Wall Street and a mixed performance in the Far East this morning. The FTSE 100 closed 46.4 up at 5667.2. Meanwhile, the Dow reversed early gains to trade down 4.2 points at 11,838.5
Ukrainian iron ore producer Ferrexpo failed to cut much of a dash when its debut as a FTSE 100 constituent coincided with the share price dropping 9p to 400p. Another newcomer was Petrofac, up 11½p at 737½p.
They replaced Alliance & Leicester, 11½p lighter at 294½p, and housebuilder Persimmon, which fell 15¾p to 355p.
Property shares were marked lower after HSBC downgraded the sector. The broker remains bearish about the real estate investment trust sector, which it feels is likely to suffer from rent reductions as the economic downturn squeezes occupier demand.
It has cut Land Securities, down 64p at 1275p, from neutral to underweight while slashing its target from 1500p to 1195p. It is also forecasting a 30% drop in the share values of underweight rated Liberty International, off 23½p at 881p, and Hammerson, 13½p lighter at 902½p. Liberty has been subsequently cut from from 680p to 565p, and Hammerson from 700p to 610p.
JPMorgan repeated its overweight rating on British Land, 21p softer at 745p, Brixton, 10¼p off at 250p, and Land Securities, but is still neutral on Capital & Regional, 13½p lighter at 227p, Derwent London, 1p dearer at 1089p, Liberty, and Segro, down 18¾p at 376¼p. It has cut its target on British Land from 1200p to 1000p, Brixton from 390p to 320p, Capital & Regional from 465p to 300p, Derwent from 1652p to 1200p, Liberty from 1115p to 1000p and Segro from 565p to 450p.
Sugar giant Tate & Lyle stood out with a jump of 18¼p at 392½p despite the best efforts of Investec Securities, which has maintained its hold rating on the shares but slashed its target from 490p to 400p. It is taking a bearish view of prospects several years out, blaming everything from floodwaters in Iowa through to the cost of corn, which will combine to push up costs. The broker has cut its earnings forecast for 2010 from 42.8p to 38p a share.
Goldman Sachs upgraded JKX Oil & Gas, 10p better at 456¾p, from neutral to buy and added the shares to its 'conviction buy list'. The broker has also jacked up its six-month price target from 471p to 569p.
Goldman said JKX has until recently been the main investment vehicle for the Ukraine gas sector. But since April, the reinvigoration of Regal Petroleum, 7¾p higher at 292p, and flotation of Cadogan Petroleum, 8¾p lower at 181¼p, have left JKX in the shade.
SG Securities has started coverage of contract caterer Compass, 11¼p better at 369½p, with a buy rating and a 415p target.
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TOMORROW'S AGENDA
• Comet owner Kesa Electricals publishes its results for the 15 months to the end of April. Kesa predicts sales of white goods will slump as cash-strapped consumers delay replacing old machines. Citigroup recently said electrical companies selling big ticket products will suffer most as shoppers curb spending.
• Figures from the British Bankers' Association - including data on mortgage approvals - will be closely watched. Last month, the BBA reported that the number of mortgages taken out by homebuyers was the second weakest on record in April and 40%.
• Whether package holiday companies are continuing to shrug off the consumer slowdown will be revealed as Thomas Cook reports first-half results. Chief executive Manny Fontenla-Novoa has said sales are holding up as customers prove unwilling to forgo their week in the sun.
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