Market report: ITV stock leaps as investors switch on to takeover buzz

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Analysts at Macquarie put ITV shareholders in a festive mood today with an upgrade that fuelled take-over speculation and its share-price rally.

Investors tuned into the broadcaster-cum-producer’s shares, which rose 5.1p to 205.1p as the Aussie broker raised its rating to outperform from neutral.

Speculation has been rife since Sky agreed a £18.5 billion takeover by 21st Century Fox that cable giant Liberty, ITV’s largest shareholder, will launch a full takeover.

Macquarie’s Giasone Salati suggested that if a bid comes in it will likely be around 300p, valuing ITV, which is behind hit shows such as Maigret Sets a Trap, at £12 billion. 

Salati also pointed out that retail prices are improving, highlighting more-expensive bananas in supermarkets. That is a good sign for ITV, the analyst argued, since consumer goods make up almost a third of total advertising spending.

“We argue that a shift towards above-the-line marketing spending, as opposed to promotions, is inevitable,” said Salati.

It was another slow and steady day on trading floors as the FTSE 100 drifted 6.87 points lower to 7034.55 during another session of patchy deals. 

Shire, off 19.5p at 4538.5p, was in the red after late-stage trials of rival Roche’s haemophilia drug showed it worked. Since its $32 billion takeover of Baxalta this year, haemophilia is now Shire’s biggest source of revenues and investors viewed the Roche results as a sign of increased competition for Shire.

Paysafe’s recovery continued to scare off the bears as more short-sellers trimmed their bets against the digital payments firm after last week’s short attack.

Hedge funds AEK (UK) and Public Equity Partners Management lowered their shorts, but remain hopeful the company’s shares will fall. 

Last week, London-based fund Sand Grove closed its short position on the day Spotlight Research, the anonymous short-seller, issued its critical report that caused the shares to crash as much as 30%. Today they edged up 2.7p to 349.5p.

A 67p, or 14%, surge to 557p from MP Evans was not enough for the Indonesian palm oil firm to recover from the falls yesterday when Malaysian firm Kuala Lumpur Kepong’s £415 million takeover fell through.

Indian online fashion firm Koovs lost some of its glamour in the City, sliding 3.8p to 48.7p, after its first-half losses widened to £9.1 million as it spent more on marketing. 

Chief executive Mary Turner admitted India’s demonetisation programme had “a short-term impact on the market and e-commerce”.

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December 23, 2016 |
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