Saga’s revival as traders claim the only way is up
RETIREMENT specialist Saga surfed a wave of positivity after a major bank said its recent results ‘reset expectations’.
The over-50s cruises-to-insurance firm has been struggling to keep investors happy over the past year, amid a price war in insurance prompted by increased competition and price comparison sites.
Just this month Saga slashed its dividend from 9p to 4p, wrote down the value of its business by £310m and announced a fundamental rethink which would knock profitability in its insurance business. But analysts at JP Morgan believe the only way is up.
They changed their recommendation on the stock from underweight to neutral, meaning investors need not avoid the company.
After Saga’s near-50pc fall in share price over the past month following its full-year results, JP Morgan’s Edward Morris said it had ‘significantly reset expectations’ and added that there is probably only a limited opportunity for the shares to fall further. by Lucy White Saga yesterday climbed 5.8pc, or 3.35p, to 60.9p.
JP Morgan named Hastings as its pick of the motor insurers, which saw its shares edge up 0.1pc, or 0.2p, to 218.8p. But it downgraded Direct Line, saying there was little room for the shares to rise further. Direct Line ended the day down 0.1pc, or 0.2p, at 343p.
The FTSE 100 headed lower, along with its European peers, as concerns mounted that China’s ruling Communist Party might ease economic stimulus, after figures last week showed unexpected growth in the country’s economy.
But traders are worried that this could reduce China’s demand for raw materials. Miners sank, including Anglo American, down 3.9pc, or 84.5p, to 2080.5p, while
Rio Tinto fell 1.8pc, or 82p, to 4555p. Antofagasta dipped 1.8pc, or 16.6p, to 958.2p, Fresnillo finished down 1.6pc, or 11.8p, at 748.2p and BHP Group tumbled 1.5pc, or 28.2p, to 1843.2p.
Sainsbury’s dragged on the Footsie as investors nervously awaited a report from the UK’s competition regulator – due today – on a planned merger with Asda.
Earlier this year the Competition And Markets Authority (CMA) stated provisionally that the deal should either be scrapped, or at the very least a large number of stores would need to be sold.
Sainsbury’s has been standing its ground, but Barclays analysts said: ‘Assuming the CMA does not perform an about-turn, the next question is whether Sainsbury’s and Asda let the matter rest or investigate other legal avenues.’
Shares in Sainsbury’s fell 1.7pc, or 3.8p, to 226.6p, while the FTSE 100 dipped 0.7pc, or 51.32 points, to 7471.75.
Tycoon Mike Ashley refused to give up on his pursuit of home shopping business Findel.
His Sports Direct, which owns 36.8pc of Findel, made a £139m bid for the company in March. Embarrassingly, Ashley was forced to extend the offer deadline for the second time yesterday as he had still only received acceptances from shareholders owning less than 1pc of the business.
Findel fell 0.6pc, or 1p, to 168.5p, while Sports Direct edged up 0.3pc, or 1p, to 303.8p.
The board of Hull-based internet provider Kcom was decidedly more enthusiastic about a bid it received from Universities Superannuation Scheme, one of the UK’s largest pension providers for university workers.
USS will buy Kcom for £504m or 97p per share – a 33.8pc premium to its trading price on Tuesday. Kcom’s shares shot up by 33.8pc, or 24.5p, to 97p.
Gold miner Centamin boosted the FTSE 250, climbing 12.8pc, or 10.2p, to 90.04p after digging up more gold than expected in the first quarter of the year.