Sector movers: ARM lifts techs; Drax weighs on electricity stocks

25th Jul 2012 16:11

The technology hardware and equipment sector was the best performing category on Wednesday after some well-received results from chip designer ARM Holdings.Sales in the three months to the end of June came in at £135.5m and earnings per share were 3.6p, ahead of Peel Hunt's forecasts of £130m and 3.2p, respectively, with both PD licenses and royalties beating expectations. Shares surged by 8.29% to 525p in afternoon tradePeel Hunt said that the when the stock moved beyond 600p at the start of last year, it was trading at 50 times forward earnings; nowadays, the price-to-earnings multiple is 33 and will fall to 27 next year. "This now looks like a relatively normal tech rating for a stock is that is not normal and represents an excellent opportunity to buy into this long term, global, cash generative, well managed, secular growth story," analyst Paul Morland said. In contrast, the electricity sector was unwanted today with power station group Drax providing a drag.Shares in Drax, which converts coal and biomass to energy, were down a whopping 16% after the government's proposals for biomass subsidies disappointed.1.0 renewable energy certificate (ROC)/MWh subsidies are now available for full conversion (counted as over 90%), with lower 0.6-0.9 ROC/MWh for enhanced co-firing at various levels, Investec explained today. "Drax had been planning to convert the station to 50-60% co-firing, but we believe that the lowered level of subsidy (1.0 ROC/MWh had been hoped for, rather than 0.6-0.9 ROC/MWh) challenged the viability," said analyst Angelos Anastasiou.Therefore, Drax is now planning to progress with 'full' conversion of individual units and says that within five years, it will become a predominantly biomass-fuelled generator. Top performing sectors so far todayTechnology Hardware & Equipment 709.77 +6.00%Real Estate Investment Trusts 2,070.97 +1.17%Insurance (non-life) 1,493.49 +1.08%Financial Services 4,653.20 +0.85%Electronic & Electrical Equipment 3,045.04 +0.80%Bottom performing sectors so far todayElectricity 7,983.68 -6.51%Fixed Line Telecommunications 2,459.78 -3.01%General Industrials 3,071.34 -1.91%Pharmaceuticals & Biotechnology 9,680.67 -1.57%Household Goods & Home Construction 6,851.68 -1.35%BC