City regains its appetite as it piles into supermarkets
INVESTORS were busy playing supermarket sweep today, stocking up on shares in Britain’s biggest grocers.
Sainsbury’s may have reported a sixth straight quarter of falling sales yesterday as the “Big Four” struggle to cope with the rise of the discount retailers but analysts remained upbeat over its prospects under the direction of Mike Coupe.
An in-depth look at the sector from Moody’s suggested there is no sign of margin recovery from the big players yet. However, it added that attempts to slow falls in same-store sales are working and the remarkable rise of Aldi and Lidl is finally slowing.
“The UK’s economic growth, rising real wages and improving consumer sentiment could support the Big Four’s gradual recovery from fiscal 2016/17,” Sven Reinke, vice-president and senior analyst at Moody’s said.
Cantor Fitzgerald’s number crunchers upped their target price to 312p and lifted their recommendation to Buy. Sainsbury’s rose another 6.6 p to 266.9p, Tesco was up 3.8p to 215.3p, and the smallest of the group, Morri
sons, gained 2.7p at 182.6p. Grocery delivery firm Ocado, up 8.3p to 390.9p, was also swept up in the sector’s rise.
The FTSE 100 edged up 15.70 points to 6845.97 with all the talk about last night’s Mansion House speech from the Chancellor, who unveiled a fire sale of assets, including Royal Bank of Scotland — the Government’s problem child.
Royal Mail shares were the biggest losers on the top flight, down 18p to 498.5p, after the Government sold a 15% stake for 500p per share.
JPMorgan Cazenove, which has a 605p target price, today told its clients to buy shares in the postal service, suggesting the Government’s sale might simplify forthcoming labour and pension negotiations.
There was a glimmer of hope for the embattled oilfield services sector as
Petrofac was awarded a four-and-ahalf-year engineering and procurement contract in Oman worth $900 million (£582 million). Shares were up 11.5p to 908p. AIM tiddler New World Oil & Gas was back in the headlines today. The oil explorer hit the headlines recently when well-known small-cap trader Chris Williams, who goes by the name “Chris Oil”, accidentally bought half the company on behalf of his mum, a 76-year-old B&B owner.
Today the company revealed it is to proceed with its fundraiser, the cause of all the confusion, to raise £3.5 million. Its shares have been suspended amid trade settlement delays after shareholders rejected the previous placing plans.
The 0.09p placing price is a hefty 65% discount to the last traded share price before trading was suspended in May.