Clients of Citigroup were told to plough into UK blue-chip stocks, which it says look “very cheap”. Despite all the goings-on on the markets of late, Citi analysts expect the FTSE 100 to pick up and break through the 8,000-point barrier for the first time by the end of next year. Brexit fears are overdone, they argue, pointing to the fact that almost three quarters of the Footsie’s earnings come from overseas. The political uncertainty has still held back share prices and as a result Citi has now made the UK its “preferred value trade”.
Anglo American (AAL) lost some of its sparkle after reporting another weak sales cycle for its De Beers diamond business. At its latest “sight” De Beers sold $295 million worth of rough diamonds, compared with $482 million at the same event last year. For the third sight in a row, it offered customers more “flexibility”, meaning they could be pickier with the diamonds they bought and defer purchases until later in the year. Analysts said the drop-off reflected the “tough rough market”, given that many of the cutters and polishers who De Beers sell to have lots of diamonds in their inventory after a disappointing Christmas and New Year last time around. RBC cut its forecast for De Beers.
A bearish research note from analysts at Liberum left a sour taste in the mouths of Restaurant Group (RTN) investors. The Wagamama owner slid after Liberum cut its price target to 150p, claiming that the outlook was “bleak” for its legacy chains such as Frankie & Benny’s and Chiquito. The broker said that Wagamama “continues to outperform”, but it believed visibility was low while “earnings risk remains to the downside” overall.
Shares in Ted Baker (TED) fell to a nine-year low after the fashion retailer swung to a loss and issued another profit warning following “very difficult trading conditions”. The unexpectedly grim half-year results spooked investors because the retailer has a long record of weathering the tough industry backdrop better than its rivals. It reported a £23 million pre-tax loss compared with a £24.5 million profit last year for the six months to August 10. Analysts at RBC said that missing City expectations by about £20 million put the company’s previous full-year profit guidance of between £50 million and £60 million out of reach.
The chief executive of Imperial Brands (IMB) has left after long-running investor discontent came to a head in the wake of last week’s profit warning. The company said that it was searching for a replacement for Alison Cooper whose leadership and strategy have come under fire from top shareholders and City analysts. Investors have become disgruntled with the slide in Imperial’s share price, which is back to where it was when Ms Cooper was promoted to the top job nine years ago, because of the lacklustre progress from its investment in the e-cigarette market and concerns about aggressive accounting.
CMC Markets (CMCX) said yesterday that it will post better-than-expected annual profits as it weathers a regulatory crackdown and benefits from technology partnerships. The firm’s shares closed higher after it said net operating income will exceed £170 million for the full year. Analysts had previously pencilled in about £154 million, while the company chalked up £130.8 million in 2018. Peter Cruddas, chief executive, was pleased with the first-half performance to September 30, saying income in the core spread bets business was only slightly down on last time.
Tempus – Johnson Matthey (JMAT): Buy. Its product for electric vehicle batteries is likely to be potent and is not factored in to the price
Tempus – Kainos Group (KNOS): Hold. Aside from government, private sector and overseas markets offer solid growth
