FTSE falls as Britvic’s fizz goes flat
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CSR, the fast-growing wireless chip maker, rallied for a second consecutive session on Thursday on analyst optimism about the prospects for growth of bluetooth technology.
CSR fell sharply on Tuesday after it disappointed investors with its prediction that by the end of the year 35 per cent of mobile handsets would include the short-range radio technology.
However, after a near-9 per cent rally on Wednesday, CSR shares climbed a further 5.9 per cent to £10.41 yesterday after Merrill Lynch said bluetooth penetration was more likely to be 45 per cent. “The bluetooth business is CSR’s rapidly growing cash cow, enabling the company to expand beyond it into other markets through either organic expansion or acquisitions,” analysts said. The shares have risen 171 per cent over the last 12 months, but have slipped of late on concerns over the sustainability of the strong performance.
Citigroup also raised its price target on the stock from £10.57 to £14.09 and said the current share price underestimated the strength of the bluetooth market and growth of CSR’s next generation of products.
In the wider market, the FTSE 100 finished 11.1 points, or 0.2 per cent, lower at 5,833.0 as initial gains were wiped out by a more hawkish tone on European inflation from Jean-Claude Trichet, president of the European Central Bank. The FTSE 250 eased 5.4 points, or 0.1 per cent, to 9,498.5. Volume was solid, with 3.4bn shares changing hands.
Aviva, the UK’s largest life insurer, gained 3.7 per cent to 820p after profits came in ahead of analysts’ expectations. Numis upped its price target from 800p to 880p and said the shares did not look expensive given the growth reported.
News that Aviva was abandoning its annual dividend growth target of 5 per cent in favour of a higher payout also eased concerns that the company was set to make an acquisition. Aviva has been linked with a bid for rival Prudential, which eased 0.7 per cent to 602½p.
Soft-drinks group Britvic, which made its market debut at 230p in December, slumped 23.2 per cent to 210½p after the company said full-year results would come in at the lower end of market expectations as consumers shunned carbonated drinks in favour of healthier alternatives. The company, is set to enter the FTSE 250 after next week’s reshuffle.
Drax Group, the power supplier is set to join Britvic in the mid-cap index following its listing in December, rose 1.4 per cent to 637¾p as Morgan Stanley upped its price target on the stock from 590p to 645p. Analysts said the move reflected revised commodity price assumptions and expected the shares to trade strongly into, and on the back of, results on March 8.
Persimmon, the UK’s leading housebuilder, rose 1.1 per cent to 14.03p as ABN Amro upgraded the stock from “add” to “buy”. “Despite evidence of improving trading conditions, Persimmon’s share price continues to factor either a 6 per-cent house price fall or no future value creation,” said analyst William Jones.
Bovis rose 3.1 per cent to 839½p and Redrow gained 1.9 per cent to 555p amid ongoing speculation that Bovis was running the rule over its smaller rival.
Standard Chartered rose 3.8 per cent to an all-time high of £15.27 as strong earnings from the Asia-focused bank pleased investors. HBOS lost 1.8 per cent to 999p amid further broker downgrades following the bank’s luke-warm figures on Wednesday. Fox-Pitt, Kelton cut its rating on the stock from “outperform” to “in-line” and said an end to the bank’s buyback programme was inevitable given its organic growth plans.
Outsourcing group Capita lost 0.8 per cent to 481¼p as chief executive Paul Pindar cashed in on the stock, which has risen 14 per cent since the start of the year. Mr Pindar sold 600,000 shares at 476p, worth £2.8m.
Tomkins dropped 5.7 per cent to 316p, its biggest one-day decline for over a year, after Merrill Lynch placed 76m shares, almost 10 per cent of the engineering company, on behalf of a group of US investors.
Premier Farnell, the electronics components group, lost 3.7 per cent to 197p after data from the US-based Semiconductor Industry Association showed a fall in month-on-month semiconductor sales in January.
Hunting, the oil industry services company, added 5.1 per cent to 365p as its annual profits were boosted by strong demand from oil companies. ABN Amro raised its price target from 400p to 440p.
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