Merlin slips as waxworks deal leaves brokers cold
THEME park operator Merlin
Entertainments was hoping the announcement of its first Madame Tussauds franchise would cheer investors.
But instead, a double downgrade from analysts at HSBC rained on its parade as shares tumbled by 6.7pc, or 25.1p, to 350p.
The first Tussauds franchise is set to open later this year in Prague. Though the waxworks brand already operates sites around America and Asia, as well as its famous London tourist attraction, the deal with the Wax Museum Prague is the first time Merlin will allow another business to use its name and know-how.
The entertainment company hopes such deals will allow it to expand without having to spend as much buying property and employing staff.
But HSBC was unimpressed as analysts slashed their recommendation on the stock from ‘buy’ to ‘reduce’. They are not convinced of Merlin’s long-term growth prospects, saying underlying performance has been sluggish. HSBC added that they saw no reason why Merlin’s shares should be valued any more highly than those of other leisure groups, such as cruise operator Carnival and cinema chain Cineworld.
In a note to clients, HSBC said: ‘Merlin isn’t a bad business, but we do think it’s overvalued.’
After a lacklustre run since it listed on the stock market last October, luxury car maker Aston
Martin has begun to rev up again. Shares rose as analysts at US firm Bernstein predicted the stock might actually outperform the market. Bernstein’s Max Warburton said that, back in January, he was worried it was too early to get involved with Aston Martin as he considered there might be a profit warning on the horizon.
But in an update, he said: ‘Well, we haven’t had the profit warning yet. We may still get one. But the stock has fallen far below our price target and we think it’s time to get more constructive.’
Aston Martin closed up 3.7pc, or 32.4p, at 902.4p – still well below the 1900p at which it listed.
The company is due to release the DBX, its first luxury SUV, in the first half of next year. Warburton said the timing of this was critical. He said: ‘If it’s six months late, things will get very rocky.’
Metro Bank shares were down 3.1pc, or 21p, at 656p, as investors prepared for its AGM today. All three major shareholder advisory firms – Pirc, Glass Lewis and ISS – have recommended investors vote against its founder and chairman Vernon Hill, after an accounting error rocked the lender.
The FTSE 100 ended the day down 0.5pc, or 37.74 points, at 7310.88, as fears around the financial health of travel firms weighed on Tui (down 6.4pc, or 53.2p, at 775p) and Easyjet (down 3.4pc, or 35p, at 990p).
Russian steel firm Evraz was one of the biggest gainers as VTB Capital said Russian steel makers were likely to be the major beneficiaries of the country’s plan to spend £133bn on infrastructure between 2019 and 2025. Shares climbed 1.2pc, or 6.6p, to 575.6p.
Marine firm Braemar Shipping, which provides services from financial consultancy to logistics, was riding a wave as its shares climbed 11.1pc, or 20p, to 200p.
For the year ending February 28, revenue jumped 14pc to £117.9m.
Losses, however, slipped to £27.4m from £2.9m a year earlier, though much of this was due to a loss-making business which has now been sold.
Market tiddler Wyg, which advises engineering and infrastructure clients, was raking it in after revealing it had accepted a takeover bid from US rival Tetra Tech. The 55p per share offer was more than three times as high as Wyg’s closing price on Friday. Shares shot up 235.9pc, or 37.75p, to 53.75p.