“Our ‘buy’ recommendation was unsuccessful as we underestimated the severity
of top-line headwinds facing Cobham,” said analysts.
However, the broker did suggest that Cobham was a potential acquisition
candidate, given its strong market positions and relatively small market
capitalisation.
The air refuelling equipment business was demoted from the top flight at the
December reshuffle, having seen its share price tumble as defence contract
concerns intensified.
“The shares fell sharply in October-November 2010, following a profit warning,
but have since rallied 15pc from the low on November 30. We believe this is
a good opportunity for investors to rotate into more attractive investment
opportunities, hence our downgrade,” said Goldman Sachs analysts.
Many of Monday’s significant share price moves were dictated by the crisis in
Cairo, with dealers moving out of riskier stocks such as financials – Royal
Bank of Scotland eased 1.02 to 41.68p – and travel companies also took a
hammering.
TUI Travel slid 6.8 to 253p and International Consolidated Airlines
Group fell 4.6 to 256.4p. The airline group, comprising British Airways
and Iberia, fell back despite a bullish note from Morgan Stanley, giving it
an “overweight” rating and €4.20 price target.
Jordan-based Hikma Pharmaceuticals fell 24 to 804p too as investors
fretted over its exposure to the Middle East. But, analysts at Jefferies
suggested that such concerns might be overdone. “As a local company we
believe Hikma’s business is relatively protected compared to foreign
players, and any disruption to big pharma could be an opportunity,” said the
broker.
Other stocks were shrugging off their exposure to Egypt. Despite putting a
stop to oil drilling in the area, BG Group surged 67p to £14.01 as
the oil price spiked in reaction to fears that unrest could spread across a
region that produces over a third of the world’s oil. Boosting BG too were
rumours that it could be a takeover target.
Not all of the day’s sharp movements were dictated by events in the Egyptian
capital, though. Rexam, maker of cans for drinks such as Red Bull,
bubbled up 7 to 341½p as it signed a long-term contract with its largest
customer in Brazil.
Miners advanced as the price of copper rose – it hit a record high of $9,782 a
tonne in after-hours trading. Xstrata gained 30p to £13.85.
Greene King surged 23.7 to 472.2p as the pub group said in a trading
update that group sales had been boosted by strong sales at its Hungry Horse
pub restaurant chain.
At the other end of the spectrum, SThree sank 23.7 to 371.3p as
investors locked in profits following the recruiter’s full-year results.
Slipping back in the wake of a trading update too, was MITIE. Despite
the support services company reporting a positive pipeline and saying it was
well-placed to benefit from an increase in outsourcing, it fell 11½ to
218.3p, making it the second-sharpest faller in the second tier.
However, property group Derwent London was boosted by an upgrade from
Nomura where analyst Mike Prew raised his rating to “buy” from “neutral”.
Derwent gained 20p to £15.70. However, Mr Prew kept his “neutral” rating on
the real estate sector as a whole, saying it was “inexpensive, but not good
value”.
Further down the market, James Halstead ticked up 19½ to 412½p as
the floorings manufacturer said it expected to post a record first-half
profit on strong trading in Europe and Australasia.
Aim-listed Romag Holdings suspended its shares following the disclosure
of a payment from its chairman to the company. Before suspension, it was
down 5½ to 35½p. “The board recognises that various matters should have been
disclosed at an earlier date and the non-executives are commissioning an
investigation into the transactions undertaken,” the company said.
Antisoma slides on drug disappointment
Antisoma plunged 4.03 to 2.2p as the Aim-listed biotech endured another drug
failure.
The company announced that the final-phase trial of its leukaemia drug,
AS1413, did not meet its primary endpoint and development would be
discontinued.
Glyn Edwards, chief executive of Antisoma, said: “This is hugely disappointing
for patients, investigators, investors and employees. We will now become
smaller and focus on maximising the value of our other programmes.”
At the end of 2010, Antisoma had £23.4m in cash and the company said “steps
will be taken immediately to reduce expenditure significantly”.
Analysts questioned Antisoma’s prospects, with Paul Cuddon of Peel Hunt saying
“little value remains in Antisoma, and sadly we fail to see an ongoing
future”.
The disappointment marks the second late-stage failure in less than a year.
Last March, Antisoma called a halt to a key lung cancer drug, causing a 75pc
fall in its share price, from which it has never recovered.
After that setback, the company cut its headcount by a third to 60 people.