Market Report: EasyJet gets a lift after turbulence over Iceland
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Your support makes all the difference.Shares in easyJet have suffered from turbulence in recent weeks as an expected takeover from the Icelandic investors FL Group failed to materialise. Rather than make a full bid, the Icelanders decided to bank the £100m profit they had made.
The Citigroup analysts Andrew Light and Jeremy Bragg think the time has come to start buying the shares again. In a note to clients they said easyJet looks cheap without the takeover premium in the price and that revenue data for March was much better than they had expected.
The analysts also point out that easyJet is trading at a significant discount to its peers, based on book value multiples, and have an unchanged target price of 400p. EasyJet shares were well bid, closing 5p better at 335p with almost 8 million changing hands.
Sticking with air transport, the ongoing takeover saga at BAA seems to have lost the interest of many traders, with the suitor Ferrovial almost certain to increase its offer for the UK's largest airport operator. The market rarely gets these things wrong and traders expect another offer to come in at 835p-850p. The shares drifted lower yesterday as traders booked profits to look for better opportunities, sending BAA 6.5p lower to 840.5p, still well ahead of the current 810p-a-share bid price.
Once again strong trading in the FTSE 100 was down mainly to demand for commodity-based stocks with miners and integrated oil leading the charge. The index closed 40.9 better at 6067, its highest close since 16 February 2001.
All the usual suspects were well bid, with miners finding favour after profit-taking on Friday. Kazakhmys gained 35p to 1,235p, Anglo American closed 67p higher at 2,405p and Xstrata added 41p to 1,974p. Strong gains on the crude oil markets sparked more buying in BP, 12p better at 693.5p, an all-time high, and Shell, up 42p at 1,970p.
Metal stocks investors will have been on the lookout for numbers from Alcoa, the world's largest aluminium producer, due out after the close in New York last night. Carphone Warehouse, 6.75p higher on 313.5p, is set to deliver a trading update today which market speculators believe will include a free home broadband offering. The shares were well bid all day, but a price war for home broadband access could spell disaster for some smaller players.
Christian Maher, the telecommunications analyst at broker Investec, said the industry could be heading for a "broadband bloodbath". The AIM-listed Plusnet became the first victim of Carphone's strategy even before the announcement, as investors deserted in droves. It closed 85.5p lower at 302p, a 22 per cent fall, while its smaller rival, the broadband supplier Pipex, was a penny weaker at 13.25p.
Shares in the London Stock Exchange were not hit too hard despite news that Fidelity Investments, the US fund management giant, has sold the last of its holding. Although the company is still trading at almost double the price offered by Macquarie Bank in December, many traders still believe a merger deal will be struck by London, the Deutsche Börse and Euronext. LSE closed down 8.5p at 1,028p.
London Scottish Bank received a widely anticipated bid approach although traders were left feeling underwhelmed by the 115p offered by the quoted private-equity investor Promethean, a penny and half better than the stock closed at on Friday. Market sources said a 135p counter-offer was on the way, possibly from the Dallas-based private-equity group Steel Partners. Even so, the lack of excitement caused the stock to drift lower on profit-taking late in the session, as it closed at 112.5p, a penny weaker.
The AIM-listed Plant Healthcare performed strongly on the back of a placing to raise £6m at 65p through the brokers Evolution Securities. The company has a 20-year licence to commercialise myconate, a naturally occurring plant yield booster which the chief executive John Brady has described as "a paradigm shift in farming practices". The placing was twice subscribed, sending the shares 6p higher to close at 73.5p, an all-time high.
The minnow Ubet2win was among the star performers in the small-cap index, adding 0.75p to close at 2.87p. The company, which operates on-course bookmaker pitches at UK horse and dog racing tracks, pleased traders by announcing the launch of an online sports book enabling customers to bet on a wide range of sports.
Traders will be on the lookout for the start of trading in Ingenious Media Active Capital today. The company, chaired by the former BSkyB chief executive Tony Ball, has raised £150m through the broker Bridgewell Securities to invest in unquoted media and entertainment companies. The shares will start trading at 100p.
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