FTSE 100 movers: Tobacco stocks smoke higher; Berkeley fails to impress
London’s FTSE 100 was up 0.5% to 7,644.94 in afternoon trade on Wednesday as investors put aside their worries about the US-China trade spat.
Imperial Brands and British American Tobacco were standout gainers as Peel Hunt initiated coverage of both stocks at ‘buy’.
The brokerage said Imperial Brands is its top pick. "IMB offers investors a resilient stream of cash flows, pricing power, high margins, and strong returns on capital with 25% upside," it said.
Where BAT is concerned, Liberum pointed out that the shares are off 34% from their highs and trade at a 40% discount to the European staples sector - the widest in 15 years.
"The market discounts the loss of all US profits after 2020, which is highly unlikely. The current rating fails to appreciate BAT's strong and durable brand positions," it said.
Ocado was also sharply higher on the back of a Peel Hunt note. It said Ocado Solutions has the potential to become the "standard" platform for retail logistics across all sectors as the operating system of retail.
"Whilst the company is currently focusing on exclusive contracts within the food retail vertical, we would advocate an eventual shift in its focus towards becoming the open industry standard; just like the Windows operating system, which has more than 80% market share as it didn’t restrict itself to just IBM manufactured computers."
The brokerage, which hiked its price target on buy-rated Ocado to 1,700p from 610p, called it "the Microsoft of retail".
Sky advanced as 21st Century Fox agreed a new deal for Disney to acquire most of its entertainment assets. Disney has agreed to pay $38 per Fox share, above the previously agreed purchase price of roughly $28.
BT Group was on the rise as investors appeared to cheer an upgrade to ‘buy’ from ‘hold’ at Jefferies and ignore news that the company has been fined £77,000 by the Information Commissioner’s Office for sending nearly 5m nuisance emails to customers.
On the downside, housebuilder Berkeley retreated despite upping its profit guidance after reporting a 15% increase in annual profit, as its outlook was cautious. Other housebuilders also lost ground, with Barratt, Persimmon and Taylor Wimpey all lower.
FTSE 100 - Risers
Imperial Brands (IMB) 2,711.50p 3.45%
Ocado Group (OCDO) 981.40p 3.44%
Sky (SKY) 1,381.50p 3.25%
British American Tobacco (BATS) 3,805.50p 3.10%
BT Group (BT.A) 214.20p 2.66%
Glencore (GLEN) 380.95p 2.49%
Fresnillo (FRES) 1,167.50p 2.37%
WPP (WPP) 1,234.50p 2.15%
Micro Focus International (MCRO) 1,384.00p 2.14%
Evraz (EVR) 526.60p 2.13%
FTSE 100 - Fallers
Berkeley Group Holdings (The) (BKG) 3,928.00p -5.05%
Next (NXT) 5,878.00p -1.90%
Barratt Developments (BDEV) 536.28p -1.85%
Persimmon (PSN) 2,588.00p -1.45%
Hargreaves Lansdown (HL.) 1,984.00p -1.44%
Marks & Spencer Group (MKS) 293.50p -1.31%
Taylor Wimpey (TW.) 182.15p -0.87%
St James's Place (STJ) 1,184.00p -0.46%
Royal Mail (RMG) 510.20p -0.43%
3i Group (III) 941.20p -0.40%