FTSE 250 movers: eOne too pricey for ITV, smaller banks a bargain says Merrill
By Oliver Haill
Date: Thursday 25 Aug 2016
(ShareCast News) - The FTSE fell along with much of the market on Thursday, with Entertainment One and Just Eat leading the way lower.
Entertainment One, known as eOne and distributor of the 'David Brent: Life on the Road' film currently in cinemas, was sent skidding as ITV swerved a potential takeover battle with private equity group KKR.
The TV and film distributor and rights owner had seen its shares climb back to 250p earlier in the month as investors hoped rumours that ITV would improve on its earlier 236p-a-share offer that was rejected by Toronto-based eOne as too low.
ITV said it had a "clear view of the value of the business", valuing the target at £1.2bn including debt, but "it appears this value is different to the level at which the board of eOne would currently engage in a more formal process".
Just Eat shares were being hit by profit taking, having hit an all-time high above 600p last week. They were further tenderised on Thursday by a downgrade from Barclays, which cut the stock to 'equal weight' from 'overweight' and said the outperformance of the shares was not enough to keep its former rating.
While Barclays analysts saw plenty of positives, they said: However, the bank said: "While we still see some upside to Just Eat's conservative guidance as it continues to outmanoeuvre the competition, this is likely to be at a slower pace.
"The rate of growth in UK orders is dropping and, with a tough third quarter comp, this could come under increased scrutiny."
Allied Minds, the university and government technology commercialisation specialist, was lower after it reported an increased loss on smaller revenues and that the group subsidiary value of its investment assets (GSOAV) had remained flat in the first half of the year.
The flat GSOAV was is in line with expectations given the portfolio valuation already reflected the uplift in value of subsidiary Federated Wireless (FW) following the $22m funding round in January.
Allied Minds reported group cash of $162.6m, of which broker Numis estimated that roughly $95m is at the group level, with the company highlighting that its current cash and financial position takes it "through December 2017".
"We note the group maintains significant flexibility in the rate of capital deployment across the portfolio and could also benefit from potential realisations."
Carillion was another stock under the cosh from a downgrade, moved by JPMorgan Cazenove to 'underweight' from 'neutral' following the group's first-half results the day before.
It said the results showed progress in the support services business with organic growth and margin expansion. However, this was offset by a weaker performance in the Middle East, where profit fell 38%.
JPM said part of this was due to the non-repeating nature of a one-off benefit taken in the prior period, but said Carillion reported that the "oil price is affecting the investment plans of some countries".
On the FTSE 250 leaderboard, challenger banks Shawbrook Group and Aldermore Group and were a notable presence again, this time thanks to a Bank of America Merrill Lynch upgrade to 'buy' from 'neutral', with OneSavings Bank lifted in the tailwind.
BofA said the introduction of the Bank of England's term funding scheme (TFS) along with a reduction in the UK macroeconomic downside risk has significantly reduced the tail-risk in the specialist lenders.
"Some fiscal stimulus has been promised by the new UK government. We think some changes to stamp duty could be one logical shift in policy, which would help the property market and increase mortgage lending. The challengers would benefit most, we think."
John Laing was another top riser after the infrastructure investment group lifted interim profits and reiterated its full-year 2016 targets for investment commitments and realisations.
Laing's management sounded a confident note regarding its ability to successfully navigate the macroeconomic waters, Brexit included, following the 8.3% increase in net asset value for the six-month stretch running through to 30 June.
Playtech shares gained on Thursday after first half results beat market expectations and unveiled a special dividend.
In the six months to the end of June, revenues rose to €337.7m from €286m, up 18% or 24% at constant currency. However, net profit declined to €48.8m from €83.9m, down 42% on a reported basis, but up 84% at constant currency, taking a hit from fluctuations in sterling.
Broker Canaccord Genuity raised its target price to 1,125p from 902p and reiterated a 'buy' rating on the stock after the company declared a special dividend of €150m, or 46 cents per share to be paid in December and lifted its interim dividend by 15% to 11 cents per share.
Canaccord said Playtech delivered "another impressive set of results, comfortably ahead of forecasts" and views the shares as the "stand-out value play in the online gaming sector".
FTSE 250 - Risers
Shawbrook Group (SHAW) 219.70p 7.54%
Aldermore Group (ALD) 157.10p 6.87%
John Laing Group (JLG) 251.60p 6.47%
OneSavings Bank (OSB) 290.60p 4.80%
Playtech (PTEC) 930.50p 3.45%
Smurfit Kappa Group (SKG) 1,873.00p 2.52%
Ibstock (IBST) 179.20p 2.40%
Essentra (ESNT) 521.50p 1.86%
Spire Healthcare Group (SPI) 349.00p 1.75%
Elementis (ELM) 226.70p 1.70%
FTSE 250 - Fallers
Entertainment One Limited (ETO) 212.00p -15.47%
Hochschild Mining (HOC) 258.60p -8.94%
Just Eat (JE.) 542.50p -4.66%
Allied Minds (ALM) 391.00p -4.40%
Euromoney Institutional Investor (ERM) 1,034.00p -4.35%
Carillion (CLLN) 283.50p -4.29%
Crest Nicholson Holdings (CRST) 465.70p -2.98%
Vesuvius (VSVS) 358.30p -2.95%
PayPoint (PAY) 990.00p -2.94%
Indivior (INDV) 310.30p -2.91%
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