Numis cuts rating on Imagination Technologies to 'add' from 'buy'

29th Sep 2016 10:31

(ShareCast News) - Imagination Technologies shares fell on Thursday after Numis downgraded the stock to 'add' from 'buy' after the company sold its Pure digital radio business.The group, which designs chips for iPhones, sold Pure to Austria's AVenture AT for £2.6m in cash as it looks to reduce debt. The deal also grants the buyer an option to buy one of Imagination's properties in Kings Langley, Hertfordshire, for £4.5m."The consideration for the Pure business is a little less than expectations, which were in the £5-10m range, however the delta is somewhat immaterial," said Numis."The Pure business had been classified as for sale by the new management team as it had been consistently loss making."Imagination made the announcement about the sale as it reported its first quarter trading update. The company said the performance of its continuing operations in the first quarter continues to be in line with the board's expectations.Numis said its rating downgrade reflects the recent rally in the stock, amid speculation that the company could be next up for grabs after Softbank agreed to buy ARM Holdings for £24bn in August. The broker raised its target price to 280p from 220p."The stock has rallied strongly in recent months, with the acquisition of ARM by Softbank the main identifiable catalyst, increasing focus on the strategic value of the PowerVR graphics business (which is a key strategic technology used by Apple). "Shares dropped 2.74% to 239.75p at 1050 BST.