Analysts cheer Bovis swoop on Galliford Try
WHEN Bovis Homes unveiled plans to bulk up by buying parts of rival Galliford Try, the initial response from shareholders was muted to say the least.
But following an initial fall on Wednesday when the deal was announced, Bovis is celebrating a much more promising end to the week. A trio of brokers upped their target price on the company’s stock, a sign that they believe it is poised to perform better than its current level.
In the wake of the offer – which follows a similar proposal that Galliford rejected earlier this year for being too cheap – Canaccord Genuity analysts bumped up the target from 1140p to 1150p.
Brokers at Swiss investment bank UBS believe the stock is now worth 1060p apiece, up from 1020p, while Citigroup had slapped a price tag of 1081p on Bovis, up from 1026p.
The triple-whammy of analyst optimism sent shares rallying 8.1pc, or 85p, to 1135p last night. Galliford Try rose 1.5pc, or 10p, to 700.5p An uptick in the value of sterling knocked the performance of export-heavy shares such as
Diageo – which closed 3pc lower, down 101p, to 3280.5p – and British American Tobacco, which lost 3.4pc, or 103p, to 2970p, because they earn most of their money in dollars, which are worth less in the UK when the pound is stronger.
But domestically exposed stocks such as Bovis’s housebuilding rivals enjoyed wide-ranging rally as traders bet that there will be a Brexit deal, boosting the UK’s economy. Construction giant Barratt Developments rose 5.6pc, or 35.2p, to 659.2p, while Persimmon rose 3.8pc, or 76p, to 2105p.
Lloyds Banking Group jumped 5.2pc, or 2.69p, to 54.63p as Barclays
shunted 5.3pc higher, up 7.92p, to 156.62p.
The rally in British-focused shares meant the FTSE 100 rose by 0.3pc, or 22.79 points, to 7367.46 points, while the mid-cap
FTSE 250 also ended in the black, climbing 1.2pc, or 233.18 points, to close at 20195.75 points.
Tesco was feeling the effect of another positive broker endorsement, after Bernstein declared the supermarket is its top stock pick for 2019.
Analyst Bruno Monteyne said Tesco will perform better than other big rivals – even though it will still cede a bit of market share to smaller grocers such as the German discounters Lidl and Aldi. Tesco advanced 1.9pc, or 4.5p, to 240.4p by the close.
Meanwhile, Robinsons and J20owner Britvic was given a stellar appraisal from analysts.
Its rating was upgraded from hold to buy at Jefferies brokers, sending the stock 2.8pc higher, up 25.5p, to 925p.
Shopping centre owner Newriver retail investment trust gained after announcing it has bought Poole Retail Park in a joint venture with money manager Bravo for £44.7m.
It has been a busy – but positive – week for shopping centre owners, after weekend reports of a private equity buyout sent Trafford Centre owner Intu Properties soaring.
Newriver gained 3.9pc, or 7.2p, closing up at 194p.
And the effect was contagious, with Intu rising 4pc, or 1.71p, to 44.98p and peer Hammerson closing 5.1pc higher, up 13.2p to 273p. Woodford Patient Capital Trust had a roller-coaster day.
It announced on Thursday night after the market had closed that the value of yet another investment was being written down, in a move that will wipe a further £36m from Patient Capital’s net asset value.
Shares in the trust – run by beleaguered manager Neil Woodford, whose other flagship Equity Income fund has blocked withdrawals – were 7pc lower in early trading, but recovered by the close to trade 0.6pc, or 0.25p higher, at 45.5p.