Market Report: Analysts predicted more pain for Pearson shareholders

Optimistic investors who think the worst is behind beleaguered Pearson should look away now.

Analysts at Goldman Sachs predicted more pain for the education publisher’s shareholders, slashing their rating to sell and tipping the shares – now 856p after a 14.5p dip – to drop to 800p over the next year.

Pearson shares have been steadily recovering from last year’s battering, aided by a dramatic overhaul in January when it unveiled plans to cut 4,000 jobs, 10 per cent of its workforce.

Last Friday, it said its restructuring plan should help it make an operating profit of £800m by 2018, but Goldman claimed the target was “unrealistic”.

The broker also warned that the extensive cost-cutting could come at the expense of staying ahead of the competition.

Stocks started the day strongly before drifting into the red on the back of some disappointing manufacturing data for the UK. A late rally helped the FTSE 100 post a loss of just 5.82 points to finish at 6,147.06.

Berkeley Group, the luxury housebuilder, retreated 128p or 4 per cent to 3,118p as Morgan Stanley sent shivers down the spines of London estate agents by predicting the prices of new high-end flats in the capital could fall by 20 per cent this year.

Intertek, the products testing group, was the blue-chip index’s biggest casualty, tumbling 139p to 2,865p. This 4.6 per cent fall was triggered by oil industry, which forced it to write down the value of acquisitions by £577m.

Solid annual results from Costain convinced investors the engineering solutions group was on steady ground. The shares were 8.5p firmer at 366.5p as revenues and pre-tax profits increased to £1.3bn and £26m respectively.

Amec Foster Wheeler, 38.2p or 10 per cent better off at 427.7p, inspired confidence as it successfully refinanced its debt despite a torrid time for oilfield services firms.

On AIM, Telit Communications was 22.75p or 10 per cent cheaper at 210.25p as Berenberg, the Israeli wireless technology firm’s house broker, cut its rating to hold ahead of next week’s annual results.