Spending spree rumours shake Smith & Nephew
Deals are clearly on the agenda for Smith & Nephew, according to JP Morgan Cazenove, which recently had a sit-down with the top brass of the FTse 100 medtech giant.
But a £2.3bn dart for Us surgical instruments group Nuvasive looks unlikely, the investment bank reckons, addressing reports the two companies had held talks.
However, analyst David adlington and the team at JPMC think s&N still may be winding up to something quite ambitious on the takeover front.
In a note to clients, they said: ‘Management clearly believe that, historically, the company has been too conservative on mergers and acquisitions and are planning to be more active going forward.’
s&N’s share price – down 3pc, or 45.5p, at 1469.5p – looked to be pre- empting a buying spree of some description.
elsewhere, Royal Dutch Shell is one of the top picks in the oil and gas sector for Barclays Capital.
Barclays pointed out that investors can expect a 6pc dividend yield (far better than keeping cash in a bank or building society), while the anglo-Dutch giant has also pledged to buy back a slug of its own shares. Up 0.7pc, or 17p, at 2427p, shell has seen its shares pick up real traction in the run-up to, and the aftermath of, its fullyear results. Both it and BP (up 0.06pc, or 0.3p, at 544.3p) benefited from the upturn in the value of a barrel of oil. In all, oil stocks have advanced around 19pc in the year to date, Barclays pointed out.
The FTSE 100 began the week on the front foot as it advanced 0.8pc, or 57.93 points, to 7129.11 amid optimism that delegations from Washington and Beijing may be able to break the China-Us trade impasse when they meet later this week. Traders seemed unflustered by a dump of economic data, which showed the UK grew by an anaemic 0.2pc in the last quarter of 2018. The construction sector, meanwhile, was at its lowest ebb since 2012.
Topping the blue- chip leaderboard was Tui, up 4.9pc, or 44.8p, at 958.2p, with bargain-hunters entering the fray after last week’s profit warning which had wiped around a fifth from the value of the international travel company.
You have to feel for those who bought into Tui in May last year when the stock was changing hands for more than £17.
ahead of the banks’ reporting season, Morgan stanley took a look at the sector, revising two of its calls. It has upgraded Lloyds (up 1.5pc, or 0.84p, at 57.72p) to ‘overweight’ from ‘equal weight’, while pushing Royal Bank of Scotland
(off 0.5pc, or 1.3p, at 237.8p) in the opposite direction.
Barratt Developments (up 2pc, or 11.2p, at 574.2p) and Bovis
Homes (up 0.05pc, or 0.5p, at 1028.5p) held up well after liberum downgraded its calls on the two builders to ‘hold’ from ‘buy’.
The recent sector-wide bounce discounted the prospect of a hard Brexit, the broker said.
Tobacco giant Imperial Brands was up 1.5pc, or 39p, at 2576.5p after it announced chairman Mark Williamson was stepping down.
It said his departure was due to the introduction of a UK corporate governance code which says chairmen should serve for a maximum of nine years.
The 61-year-old, who is also an independent director at National Grid, is to stay in post until his replacement is chosen.
There was some pep in the step of investors in Futura Medical as their shares rose a further 16.8pc, or 3.12p, to 21.75p. Futura has developed a gel that acts quicker than Viagra and has fewer sideeffects than the little blue pills.