Amec Foster Wheeler surges after thumbs up for new boss
OIL and gas services group Amec Foster Wheeler charged to the top of the mid-cap index thanks to a rating upgrade.
Morgan Stanley hiked its rating to “overweight” and revised its target price from 500p to 700p, citing increased confidence in the company’s new chief executive Jonathan Lewis. The investment bank reckons Lewis will drive “a better earnings and returns outlook” through restructuring than it previously expected.
The FTSE 250 company plans to dispose of £500m worth of assets by the end of the first half of next year, with £300m of this total to be concluded in the coming months. Robert Pulleyn, of Morgan Stanley, sees “significant cost savings potential” at Amec, in addition to its existing cost savings plan. “We forecast £100m of further annualised savings starting from the first half of 2017 with full impact in 2019,” Pulleyn added.
The investment bank thinks Lewis will announce this additional cost savings target in November at the company’s Strategy Day, which they believe will have the scope to exceed the loss in earnings associated with the disposed assets. Hopes the company’s restructuring plan will outweigh the planned disposals caused shares to surge 35½p, or 6.6pc, to 572½p.
Meanwhile, the wider market took its cue from Janet Yellen’s Jackson Hole speech, after the Federal Reserve chairman said the case for an interest rate hike had “strengthened in recent months”. In its wake, the
FTSE 100 closed 21.15 points, or 0.31pc, higher at 6,838.05.
However, stocks in the US turned negative after European markets had closed after Fed vicechairman Stanley Fischer, in an interview with CNBC, said a September rate hike was still on the table.
Mining stocks bounced to the top of the blue-chip index as copper prices stabilised. Separately, Canaccord Genuity revised its earnings estimates upwards for Rio Tinto on the back of its strong halfyear results. Shares rose 78½p to £24.68. Glencore climbed 5.8p to 185p, BHP Billiton added 33p to £10.80, Antofagasta rose 14½p to 541½p and Anglo
American inched up 18.9p to 858½p.
Elsewhere, BAE Systems rose 12p to 540½p following a rating upgrade from Berenberg, which predicted a material order book uplift in the next six months.
Shares in the Jordanian-based pharmaceutical company Hikma climbed 32p, or 1.5pc, to £21.82 after Darhold Limited, the holding company through which chief executive Said Darwazah and his family hold their interest in the group, upped its stake, buying 200,000 shares for a total of £4.4m.
On the mid cap index, Sig jumped 7½p to 126½p after roofing and waterproofing supplies producer IKO Enterprises increased its stake to above 5pc. Finally, shares in San
Leon Energy surged 23.9p, or 82pc, to 53p after it raised £170m to fund the acquisition of a 9.72pc interest in the onshore OML18 field in Nigeria.