Fresh hope as WPP seeks to lay its demons to rest
THERE has been little love for advertising group WPP after an alleged sex scandal drove out its founder Sir Martin Sorrell.
Shares are off 32pc since Sorrell bowed out a year ago when it was claimed he had paid for a prostitute on expenses – an allegation he denies.
A run of poor sales and profits have left many traders wondering if the international media conglomerate’s model has been broken by the rise of the internet.
But Deutsche Bank analysts suggest there is a silver lining of sorts in that the mood is so bleak that the stock has been oversold.
They said all WPP has to do is hit its own modest targets for a boost. The analysts are hopeful that marketing cutbacks have hit rock bottom and there could be an improvement.
They said: ‘We think that expectations for WPP are so low that even delivery of current guidance will be enough for the shares to enjoy a re-rating.’
Deutsche slapped a ‘buy’ rating on the stock and reckons shares should hit 1010p. This fresh optimism helped make WPP one of the best performers on the
FTSE 100, with the stock up 2.7pc, or 22.2p, to 833p.
Overall, the Footsie rose 0.5pc, or 38.19 points, to 7,317.38 as investors cheered better-thanexpected economic news from China, sparking hopes the global economy might be improving following a wobbly start to 2019.
Chinese factory activity expanded last month according to a survey by Beijing-based research firm Caixin, beating economists’ predictions that it would be flat.
The miners were the biggest beneficiaries from the figures, as it is hoped there will be more demand for raw materials if China takes off. Glencore climbed 2.6pc, or 8.25p, to 326.2p; BHP was up 2.9pc, or 53.8p, at 1902.4p; and
Antofagasta gained 2.9pc, or 28p, to close at 994p per share. The sunny mood even helped
Rio Tinto rise 2.4pc, or 105p, to 4566p, despite a warning that a cyclone in Australia has hit its iron ore shipments.
And Ferrexpo, an iron miner focused on Ukraine, managed to climb 6.3pc, or 15.6p, to 263.2p.
The increase came even though the FTSE 250 firm announced a further delay to the publication of its annual results.
An independent committee is probing discrepancies in payments to a charity called Blooming Land, which Ferrexpo set up to burnish its credentials in Ukraine by doing good works.
The results have been pushed back until April 25 in the hope this review will be completed by then. Elsewhere among the mid-caps, landlord Grainger climbed 0.3pc, or 0.8p, to 237.4p after it was picked by Transport for London to build 3,000 houses across eight sites near tube stations in the capital. Grainger will own a 51pc stake in the joint venture, with the rest held by TFL. Work has started on getting planning permission for the project.
In retail, online vendor Findel has won support from major investor Schroders in a battle against shopping tycoon Mike Ashley.
Ashley’s firm Sports Direct has made a hostile takeover bid for Findel as part of an acquisition spree. The Newcastle United owner has offered 161p per share, valuing Findel at £139.2m.
But Schroders – which owns an 18.9pc stake in the internet seller – has said it supports the current management. Shares in Findel rose 4.1pc, or 6.5p, to 164.5p. Sports Direct slipped 0.1pc, or 0.2p, to 292p.
Drugmaker Astrazeneca climbed 0.6pc, or 34p, to 6169p after US regulators gave approval to continue developing a medicine for treating children over three who suffer neurofibromatosis, a genetic condition which causes tumours to develop on their nerve tissue.