Rumours drive Speedy higher
EVER since September’s second earnings alert in three months, dealers have expected a cash-rich predator to park its tanks on the Merseyside lawns of Speedy Hire, the provider of tools and equipment for hire.
Speculation was rife that Speedy was even considering climbing into bed with HSS Hire in what would be a defensive £300m industry merger, but earlier this month Speedy said that it was not considering a combination.
Yesterday, rumours involving both companies did the rounds. Speedy Hire rose 1.5p to 35p on gossip that a leading private equity player could be lining up a knock-out cash offer, while HSS Hire, 2p cheaper at 61p, is said to be fighting off the predatory attentions of Ashtead, 20p up at 1120p.
Any interested bidder for Speedy Hire will have to first reach agreement with its major shareholders Toscafund which holds 14pc and Schroders, 11.3pc. They will definitely not sell on the cheap and would probably want close to the March 2014 peak of 83p before agreeing to any deal.
As dealers awaited what was the most anticipated Fed meeting in donkey’s years, with the first US interest rate hike in nearly 10 years, the Footsie advanced 43.40 points more to 6061.19 and the FTSE 250 76.38 points to 17,075.94. Wall Street jumped a further 224.18 points to 17,749.09.
International bank Standard Chartered jumped 30.7p to 512.7p after JP Morgan Cazenove reiterated its overweight stance and target price of 870p. The broker said that at current levels, the shares trade at a 50pc and 60pc discount to the average for European and Emerging Market peers.
Broker Exane BNP Paribas stopped the rot for Pearson, 36.5p higher at 743.5p. The broker upgraded to outperform, believing the risks of further earnings pressure in 2016 are real but seem discounted in an all-time low relative valuation. Cyclical and structural headwinds should abate in 2017 and it is hoped that new management will refocus the asset mix and allocate capital towards targeted acquisitions and buybacks. The target price is unchanged at £10.
With 30pc reduction signs in all its stores and a forecast that December will be the warmest for 70 years, which is bound to hit sales of winter coats and jumpers, Marks & Spencer cheapened 2.4p to 460.2p.
Investec this week cut its 2016 pre-tax profit forecast by 2.8pc to £695m and 2017’s by 2.6pc to £769m given anecdotal evidence that clothing demand generally has been weak over October and November, affected by the warm weather. Rival Next lost 60p more to 7445p on further consideration of a UBS earnings downgrade.
Direct home shopping company N Brown shed 19.4p to 301.7p after broker N+1 Singer cut its 2016 pre-tax profit forecast by £3m to £86m because of unseasonal weather in December. Department store Debenhams declined 2.65p to 73.3p.
Shares of GVC Holdings rose 26p to 441p and Bwin Party Digital Entertainment added 7.7p to 124.4p after broker-initiated coverage on both gaming companies.
It said GVC’s reverse takeover of Bwin Party should drive substantial value creation from the £125m cost savings and a broader spread of geographic, regulatory and product risk.
Vodka maker Stock Spirits advanced 9.75p to 139.25p after the tonic of revived takeover gossip. Stock hit a record low in late November after a disappointing profits warning.
Another day, another big fall in shares of Imagination Technologies, down 22.5p more at 123.5p, for a two-day drop of 40p. Investors continued to jump ship following Tuesday’s disappointing trading update showing losses at the chipmaker have doubled to £22.6m for the six months to October.
Penny share punters lifted Thor Mining 33pc to 0.03p after it said it had signed an option agreement with an Australian company, PC Gold, for the sale of TH Gold Pty, Thor’s wholly- owned subsidiary that holds the Spring Hill and Dundas Gold Projects.
Recruitment firm Work Group plummeted 2.5p or 48pc to 2.75p following a poor trading update. The company said it had made a disappointing start to 2015 and reported an unaudited operating loss of £648,000 for the six months to end- June, up from a £132,000 loss last year.
MX Oil gushed 0.25p or 12pc to 2.32p after announcing the successful bid for land contract areas in the third phase of the bid round licensing for onshore conventional concessions in the Mexican energy sector.
Elegant Hotels put on 3.5p to 115.5p after the Barbados-based luxury hotel group reported strong full-year results.
Contract news worth £300m helped Kier climb 34p to 1329p. It has secured two extensions to its existing Area 1 and 13 highways contracts with Highways England.