Segro plunges as online shopping boom fades
SHARES in Segro plunged to their lowest levels for six months after a downgrade from analysts.
The company – which is one of the UK’s largest commercial property groups – sank 10.3pc, or 138.5p, to 1204p after Kepler Cheuvreux lowered its rating on the stock from ‘hold’ to ‘reduce’ and cut the target price to 1240p from 1360p.
It followed a similar move by analysts at the Royal Bank of Canada, who cut the FTSE 100 warehouse giant’s target price last week to 1250p from 1325p.
The twin downgrades marked a change of fortune for the company, whose profits surged during the pandemic as a boom in online shopping drove up demand for its warehouses.
The group’s profits for 2021 jumped 20pc to £356m, while the value of its portfolio increased by nearly 29pc to £18.4bn.
The dividend was also hiked 10pc to 24.3p per share.
Warehouse owners such as Segro emerged as pandemic lockdown winners as retailers scrambled for extra storage space to cope with the rising numbers of online delivery orders.
With central banks around the world raising interest rates in a desperate battle against inflation, the FTSE 100 index fell before ending up 0.22 points higher at 7561.33, while the FTSE 250 was down 0.91 points to 20520.76.
The Reserve Bank of Australia raised rates for the first time in over a decade, by a surprisingly large 0.25 percentage points to 0.35pc, and flagged that more was to come.
The Federal Reserve is widely expected to hike rates in the US today, while the Bank of England is likely to act tomorrow. The rate increases come amid fears of a devastating bout of stagflation around the world as economies slow as prices rise.
Fitch cut China’s GDP growth forecast for 2022 to 4.3pc from 4.8pc, saying pandemic-related disruptions had an impact in the first two quarters of the year, fuelling fears over the health of the global economy.
Mining stocks were in the red as worries about the global economy hit commodity prices.
Glencore was down 2.8pc, or 13.8p, to 483.5p despite an upbeat forecast from brokers.
Glencore saw its ‘overweight’ rating maintained by Barclays, which said it expected to see ‘significant shareholder returns looming in August’.
The bank added: ‘Marketing is firing on all cylinders, which should dispel concerns related to trading losses from recent commodity price volatility.’
Meanwhile, Antofagasta was down 1.8pc and Endeavour Mining slid 1.1pc.
The blue-chip index’s biggest riser was BAE Systems. Ahead of its trading update tomorrow, the firm rose 3.6pc, or 26.6p, to 766.6p, taking gains for the year to around 40pc.
The company has risen sharply since Russia’s invasion of Ukraine as the war puts pressure on governments to increase defence spending.
BP was up by 5.8pc after the oil giant raked in its highest quarterly profits for more than a decade.
But the company has come under mounting pressure after bumper profits renewed calls for a windfall tax to be imposed.
Cyber security group Avast fell 5.7pc, or 32.4p, to 531.6p after it said it expected growth to slow and profits to be hit as a result of a ‘challenging global backdrop’.
In the second-tier, online auction platform Auction Technology shot up by 8pc following a broker upgrade.
JP Morgan raised its ratings to ‘overweight’ from ‘neutral’ and hiked the price target to 1150p from 1041p.