FTSE 250 movers: Paragon surges on acquisition; Hastings hit by downgrade
London's FTSE 250 was up 0.4% to 20,695.25 in afternoon trade on Tuesday, with acquisitions providing a boost.
Paragon Banking Group surged after announcing the acquisition of residential development finance provider Titlestone Property Finance for around £48m and a portfolio of development finance loans for approximately £226m.
Both Titlestone and the portfolio of loans are owned by funds controlled by Oaktree Capital Management.
Shore Capital said the deal is consistent with management’s strategy of diversifying the group’s loan portfolio and expect the headline earnings accretion to be welcomed by the market.
"The shares have been relatively weak since the group reported interim results in May and currently offer 26% upside to our fair value of 590p (before taking account of the impact of the acquisition). We therefore re-iterate our positive stance," it added.
UDG Healthcare was also on the front foot after agreeing to buy two US-based businesses - Create NYC and SmartAnalyst - for a combined consideration of up to $82.4m.
Liberum said these are two innovative and earnings accretive deals that should be well-received, particularly given the low upfront multiple, while the retention of Chris Corbin on the board is a key move to ensure the entrepreneurial culture at Ashfield remains intact.
"We expect the shares to outperform after a recent period of weakness," it said.
On the downside, insurer Hastings retreated as JPMorgan Cazenove downgraded the stock to 'neutral' from 'overweight' and cut the price target to 315p from 335p saying the competitive backdrop will weigh further on estimates.
"Given the increase in reinsurance costs this year and unhelpful weather trends, we see downside risk to the current consensus, which leaves us uncomfortable with an overweight rating heading towards H1 results. Having upgraded in late March, we move back to neutral, and await a more attractive entry point."
FTSE 250 - Risers
Paragon Banking Group (PAG) 511.00p 8.63%
BCA Marketplace (BCA) 233.00p 3.56%
Mediclinic International (MDC) 533.80p 3.41%
Premier Oil (PMO) 122.40p 3.03%
Serco Group (SRP) 95.65p 2.79%
UDG Healthcare Public Limited Company (UDG) 845.50p 2.67%
Merlin Entertainments (MERL) 399.40p 2.41%
FirstGroup (FGP) 85.70p 2.39%
Dechra Pharmaceuticals (DPH) 2,794.00p 2.34%
Grafton Group Units (GFTU) 803.00p 2.29%
FTSE 250 - Fallers
Hastings Group Holdings (HSTG) 238.00p -5.63%
Inmarsat (ISAT) 514.80p -5.44%
Softcat (SCT) 735.00p -3.67%
Alfa Financial Software Holdings (ALFA) 171.20p -2.73%
Convatec Group (CTEC) 200.00p -2.39%
Energean Oil & Gas (ENOG) 525.00p -2.05%
Vietnam Enterprise Investments (DI) (VEIL) 408.06p -1.91%
Petrofac Ltd. (PFC) 570.40p -1.89%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 313.05p -1.87%
Clarkson (CKN) 2,300.00p -1.71%