LSE gains £637m despite Brussels trade threats
QUESTIONS surrounding the future of the London Stock
Exchange’s £750bn-a-day clearing business couldn’t stop shares in the group from reaching a record high yesterday.
Investors added £637m to the stock’s value after its price target was raised from 3600p to 3800p by RBC and 3600p from 3100p by Credit Suisse.
The upgrades followed LSE’s investor update on Monday, in which it said it expects to see double-digit revenue growth in its indices and clearing arms over the next two years despite Brexit worries.
It also plans to cut costs by around £50m a year until 2019.
RBC said the update clears the way for earnings per share to hit 200p by 2019, especially given the LSE’s recent acquisition of two indices from Citi for £535m.
It also said the firm is unlikely to be affected by any decision the European Commission takes on moving the LSE’s euro clearing business to Brussels after Brexit.
Likewise, Credit Suisse said the LSE clearly remains in good shape despite its merger with Germany’s Deutsche Boerse collapsing earlier this year. LSE shares closed up 5.4pc, or 183p, to 3582p. Industrial equipment hire firm
Ashtead was among the index’s top risers in morning trading, up by as much as 1.6pc, but ended the day down 2.5pc, or 41p, to 1600p.
The movement followed the release of its results for the year ended April 30, where it reported 10pc revenue growth to £3.2bn and an 8pc jump in profit to £765m.
Ashtead said it was boosted by the weaker pound after the Brexit vote, and expects growth to continue as it begins to see the full benefit of recent acquisitions worth £437m later in the year. Following the results, Barclays raised the firm’s target price to 1867p from 1837p. Elsewhere, pub chain JD Wetherspoon enjoyed a late day rally after reporting that trading has been better than expected recently. The company said it anticipates better full-year results than it predicted last month. Shares rose 3pc, or 28.5p, to 994p.
The FTSE 100 had another relatively quiet day, finishing down 0.15pc, or 11.43 points, to 7500.44. Shares in beleaguered oil firm
Petrofac rose as its second deal announcement in a week helped to push a recent fraud investigation further from investors’ minds.
It has agreed a five-year contract worth more than £27.5m with Kuwait Oil Company, which will see it provide on-the-ground technical training.
Petrofac shares are up 13.5pc since last Thursday, when the firm announced a decade-long construction agreement with Oman’s biggest oil explorer. The recent rally is a far cry from the Jersey-based firm’s woes last month, when its chief executive and chief operating officer were questioned under caution by the Serious Fraud Office.
This formed part of an investigation into Monaco-based Unaoil, which has been accused of bribery and corruption around the globe.
Yesterday, shares rose 3.8pc, or 14.3p, to 396.1p. They remain down 54.5pc for the year. Electricity and gas provider Telecom Plus fell 12.9pc after its results for the year ended March 31 showed revenues had dropped 0.6pc to £740.3m because of low energy prices and usage. But the firm said this was partially offset by an increase in phone revenues.
Shares recovered somewhat over the afternoon, but still finished down 7.8pc, or 101p, at 1201p.
In the junior market, Faberge owner Gemfields revealed it could be bought by Chinese consortium Fosun Gold. The announcement was posted after markets closed, but said a takeover bid is likely to be higher than last month’s £211.5m offer from private equity group Pallinghurst, which Gemfields says undervalues the company. The shares were flat at 35.5p.