London midday: Stocks seeking direction

24th Nov 2011 12:02

As was the case yesterday morning (before it all went downhill in the afternoon session), equities have endured a dull session in London. Footsie spent much of the morning in positive territory, largely on the strength of good showings by banks and miners.Gains might have been a bit more impressive, however, were it not for a poll by Reuters/Ipsos MORI which showed that the majority of Britons (58%) believe the economy will get worse over the next year. That is the highest figure since February 2009, when Britain was reeling from the effects of the global credit crisis.On the bright side, the revised third quarter gross domestic product numbers came in bang in line with market expectations, and, in fact, confirmed the provisional numbers previously announced. FAGS LAGSAntofagasta, once fondly referred to as "FAGS" in a more innocent age, is firmer but lagging the performance of most of its mining peers, after nine-month results were mildly disappointing.Group earnings before interest, tax, depreciation and amortisation (EBITDA) surged 28.0% to $2,505.5m from $1,957.3m the year before. The number would have been $390.3m higher but for negative mark-to-market adjustments of provisional sales at the period end.Vedanta, Xstrata, Kazakhmys and ENRC are all showing Antofagasta a clean pair of heels, as metal prices firm up.ON FURTHER REVIEW ...Elsewhere in the FTSE 100, there has been a reappraisal of Scottish engineer Weir's acquisition of Texan hydraulic fracturing specialist, Seaboard, announced yesterday.Initial reaction yesterday was negative, but a number of brokers seem "fracking" pleased with the deal today. Panmure Gordon has raised its full-year earnings estimates, though it leaves its target price of 2215p unchanged "for now".Panmure Gordon says the company has probably overpaid based on projected earnings for the current year but at least it has invested "in the right space" and the earnings multiple drops from a forecast 13.7 to a more reasonable projection of 10.7 in fiscal 2012."Following the acquisition of Seaboard Holdings Inc we raise 2012E and 2013E EPS [earnings per share] estimates by 5.0% and 3.6%, respectively," the broker said.Peel Hunt, meanwhile, upgrades the stock from "hold" to "buy". It is of a similar mind to Panmure Gordon, conceding the "valuation looks full" while noting that the acquisition is highly complementary to Weir's existing SPM and Mesa units. "We are upgrading our FY2012E [fiscal 2012] adjusted profit before tax by 6% to £446.5m (EPS 151.5p) and move to a Buy recommendation as the shares have de-rated," writes Peel Hunt analyst Thomas Rands.Contract caterer Compass Group edges higher after Panmure Gordon updated its earnings forecasts and bumped up its price target following the company's results yesterday. The new target price is 658p, up from 643p. The broker rates the shares as a "buy".ON THE COMEBACK TRAILThe big movers are to be found among the FTSE 250 area, where cash-strapped package tour firm Thomas Cook continues to claw back some of the massive losses seen on Tuesday when it revealed it was once again in emergency talks with its bankers.TUI Travel, which was taken down by its rival's woes, was also in recovery-mode.Other companies on the recovery trail after taking recent big hits include trendy fashion firm Supergroup, telecoms outfit Cable & Wireless Worldwide and repair services provider Homeserve. Dixons, the struggling electrical retailer, appears to be stemming losses as it seeks to transform itself into a service-led company. Like-for-like sales between July and October were down 3% on the same period of 2010. However, this was an improvement on the previous quarter when like-for-like sales were down 7%. Shares jumped 10%."Interim losses came in £5m better than feared after a slightly better Q2 [second quarter], including back-to-school in the UK and after good cost control," notes Singer Capital Markets. "Management remain cautious about H2 [second half] prospects, and we highlight an increased threat from Tesco in particular but it is clear the transformation plan is winning share back," the broker added. The shares are sharply higher today, but it is worth remembering that they dived 11% or so yesterday. Nevertheless, the trading update has also given a boost to sector peer Kesa Electricals, which owns the Darty consumer electricals chain.Residential landlord Grainger posted pre-tax profit of £26.1m in the year ended 30 September 2011 compared with a loss of £20.8m the same time a year earlier.Property firm London and Stamford Property is down in the dumps, though, after it reported a first half loss compared to a profit a year earlier and said it remains cautious about future trading. Net asset value per share fell to 118.3p for the six months ended 30 September 2011 from 120.7p a year ago. The company posted a loss before tax of £3.42m compared to the previous year's £23.20m profit.Water group Pennon fell despite seeing pre-tax profits rise 11.6% in the first half. However, the firm said "customer demand has fallen by 2.3% on the same period last year, with general economic conditions impacting industrial and commercial customer demand."The whole utility sector is under a cloud today, as investors regain some of their appetite for riskier investments. FTSE 100 - RisersVedanta Resources (VED) 971.00p +4.52%International Consolidated Airlines Group SA (IAG) 139.60p +4.33%ICAP (IAP) 324.20p +4.04%Xstrata (XTA) 916.90p +3.60%Barclays (BARC) 153.15p +3.55%Kazakhmys (KAZ) 816.00p +3.49%IMI (IMI) 705.00p +3.45%Burberry Group (BRBY) 1,172.00p +3.44%Eurasian Natural Resources Corp. (ENRC) 611.50p +3.21%Lloyds Banking Group (LLOY) 22.54p +3.18%FTSE 100 - FallersNational Grid (NG.) 622.00p -1.58%Shire Plc (SHP) 1,981.00p -1.44%Severn Trent (SVT) 1,529.00p -1.29%Tate & Lyle (TATE) 660.00p -1.27%GlaxoSmithKline (GSK) 1,336.50p -1.18%Inmarsat (ISAT) 392.80p -1.08%Admiral Group (ADM) 856.50p -0.98%Smith & Nephew (SN.) 551.00p -0.90%Serco Group (SRP) 463.30p -0.88%Morrison (Wm) Supermarkets (MRW) 307.90p -0.84%FTSE 250 - RisersThomas Cook Group (TCG) 13.82p +24.28%Dixons Retail (DXNS) 10.15p +8.44%Supergroup (SGP) 470.00p +8.00%Kesa Electricals (KESA) 85.30p +6.36%Cable & Wireless Worldwide (CW.) 15.06p +6.06%Kenmare Resources (KMR) 33.10p +5.82%Bwin.party Digital Entertainment (BPTY) 134.30p +4.68%Homeserve (HSV) 240.20p +4.62%FTSE 250 - FallersCOLT Group SA (COLT) 85.00p -7.10%KCOM Group (KCOM) 70.00p -4.24%PZ Cussons (PZC) 337.20p -3.93%Heritage Oil (HOIL) 163.40p -3.88%Pennon Group (PNN) 675.00p -3.16%Telecom Plus (TEP) 724.00p -3.14%London & Stamford Property Ltd. (LSP) 115.30p -2.86%--jh