Market Report: Ashtead dives as the City sees US downing tools

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Analysts took the axe to their forecasts for Ashtead Group with fears building over the tool-hire firm’s growth prospects in the US.

Credit Suisse predicted profit growth would stall in the next few years after cutting its earnings forecasts for next year by 15% and for the following year by 29%, and downgrading its rating to underperform.

“The sharp contraction in construction activity in emerging markets (and Canada) is likely to result in sustained pressure on used-equipment prices in the US,” analyst Karl Green warned.

It follows plans to cut spending next year in the US, where Ashtead operates Sunbelt, its largest business.

Investors ignored the bullish Buy note from Berenberg and followed the advice of Credit Suisse by selling the shares, which fell 48.16p, or 5.6%, to 813.34p.

Ashtead was joined at the bottom of the blue-chips chart by luxury goods maker Burberry, 34p cheaper at 1428p, as HSBC removed its buy stance.

The broker shrugged off whispers of a takeover to focus on a weaker pound and limited cost-cutting, adding that potential cash returns do not justify its share spike.

A dead-cat bounce for the miners after yesterday’s battering lifted the FTSE 100 11.19 points to 6136.63.

But BHP Billiton slipped 1p to 820.4p as Jefferies cut to hold, arguing that BHP should be using its cash to pay down debt rather than chasing high-quality copper assets from the likes of Glencore.

FTSE 250 cars dealer Lookers reversed 1.2p to 161.9p as its annual results hit targets, while smaller AIM dealer Vertu Motors fell 4.67p to 63.83p on plans to raise £35 million through a share placing for more acquisitions.

A day after revealing its chief executive is to step down, Lakehouse improved 2.75p to 43.5p as activist investor Slater Investments and the social housing contractor’s founder Steve Rawlings called a vote to oust the board. Together they own more than 20% of the company. Rawlings quit as a director after last year’s float in which time the company’s value has halved, with profits this year expected to be below the previous year.


Penna recruits Metropolitan Police officers

AIM-listed Penna Consulting, which recruits for the Met Police, was unchanged at 365p, the price at which it agreed to be bought out by Swiss staffing giant Adecco in a £105 million takeover. It spells a £28 million payday for Penna chairman Stephen Rowlinson, who has a near-30% stake in the human resources firm.

In a busy day for AIM fundraisings, oilers Pantheon Resources and Amerisur Resources, raised $30 million (£21 million) and $35 million. 

The former, one of the few small-cap oil successes over the past year, having grown its market cap to £250 million, dipped just 1.4p to 127.6p. The latter, chaired by former England and Wales Cricket Board chairman Giles Clarke, retreated 2.75p to 26.75p.

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March 10, 2016 |
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