Market Report: Astra sparkles after cholesterol breakthrough
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Your support makes all the difference.AstraZeneca has been the subject of a handful of bid rumours in the past few weeks, but it was Monday's news that Crestor can cut "bad" cholesterol by up to 70 per cent and unclog arteries that sent the shares to 3,130p, a rise of 56p and a four-year high.
Some traders feel the strong newsflow on the drug will encourage rivals to think about making a bid for the group, currently valued at a little less than £50bn. With most big pharmaceutical groups struggling to rebuild pipelines of blockbuster drugs, Crestor would be a welcome addition to any portfolio. In the year to April, sales of anti-cholesterol drugs amounted to a staggering $29bn (£16bn) in just 13 countries.
Zocor, an anti-cholesterol drug made by the German pharmaceutical group Merck, is due to come off-patent on Monday, and the data from Crestor could win AstraZeneca a big chunk of the $4.4bn annual sales generated by Zocor.
Technical traders believe the short-term graph on Carnival, the cruise ship operator, looks good and the stock seems to have bounced off the lows. The group has struggled in the past year due to rising fuel costs and lower demand for Caribbean cruises, but analysts reckon the worst may be behind the company. The broker Dresdner Kleinwort Wasserstein reiterated its "buy" recommendation on the shares with a 2,800p target as they added 16p to close at 2,210p.
It has now been two months since the Russian gas giant Gazprom decided against making a move for Centrica, the gas supply group once part of British Gas. Even so, the bid talk will not go away and traders continue to support the stock in the expectation that Gazprom will make a formal offer for the group. Shares in Centrica were well bid yesterday, closing 10.75p better at 282p in a strong market with almost 34 million changing hands.
In the wider market, a late rally on a good opening on Wall Street wiped off earlier losses as the FTSE 100 closed 32.1 better at 5,658.2.
In the mid caps, a rumour that a private equity group is poised to make a 550p-per-share swoop for the newsagent WH Smith sent the stock 23p better in early deals before profit-taking knocked some of the gloss off gains, with the shares closing 12.75p better at 460.75p. Some traders were sceptical about an offer being made, pointing to the fact that WH Smith is splitting its retail and news distribution divisions, even though no timeframe has been set for the split.
The insurer Benfield Group was among the leading FTSE 250 gainers as the broker Merrill Lynch placed 11.5 million shares at 340p on behalf of management and employees. Brokers said demand for the placing was very good, and by the close the shares had risen 4.75p to close at 349p, a good result in light of a Citigroup insurance-sector downgrade.
Victoria Oil & Gas shares were strong, against the market trend in smaller oil exploration and production stocks, helped by the Russian investor Glengary Overseas building a significant stake in the rival JKX Oil & Gas. Victoria climbed 14.25p to 154.75p on decent volume. Recent activity at the group's Siberian wells has been hampered by bad weather but traders are betting the mud will clear in the Russian summer and the company will get back on track sooner rather than later. JKX was the leading FTSE 250 gainer, adding 30.5p to close at 404p.
Despite being offered 1,050p per share by the Swiss giant Novartis, some investors are hanging on to Neutec Pharmaceuticals in the hope a counterbid may surface. Rumour has it Merrill Lynch, which owns more than 10 per cent of the equity, is in no rush to accept the offer, pitched at more than double the level at which the shares were trading before bid talks began. The shares were unchanged at 1,068p yesterday.
Traders remain upbeat about another bid coming in for the dental clinic operator Oasis Healthcare, as the shares gained 2.25p to 26.25p. The company rejected an initial approach from a mystery bidder on Monday, even though the bid was pitched "significantly above" the 24.5p the shares were trading at. The rumour around the small caps is that another bid could come in at as high as 35p per share, valuing the company at £28.4m.
Another company that ended takeover talks on Monday did not fare so well. Cardpoint, the independent ATM operator, dropped 6p to 78.5p, having lost 12p in the run-up to the announcement. The rumour is that short sellers have made a killing on the shares and a new offer looks very unlikely to materialise.
The hot weather has encouraged investors to take a punt on the sausage maker Cranswick, which has had one of its busiest months on record. The shares had risen to a 12-month high of 674p by yesterday's opening, but profit-taking saw them fall 12p to 662p.
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