Market report: Shock for Poundland faithful as City analysts savage budget store

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Shareholders of Poundland who kept hold of the stock after yesterday’s gloomy update got a shock  as analysts took an axe to forecasts.

HSBC, JPMorgan, and Citi were among the brokers who cut their target prices for the discount retailer.

Poundland, which was relegated from the FTSE 250 in March after a torrid 2015, revealed that its £55 million takeover of 99p Stores had hit sales in the second half of the year.

While HSBC’s Andrew Porteous agreed this was a “legitimate reason” for losing focus on the core business, he was concerned by the “extent and duration” of the slowdown. The previously bullish analyst slashed his target price by almost half to 160p and dropped his rating to hold.

Heeding the advice, investors ducked the shares, which dropped 11.25p, or 8%, to 131p — an even heavier fall than yesterday — taking them to new lows and a long way off the 300p price the company floated at two years ago.

It was a cautious end to the week as investors were waiting anxiously on the meeting this Sunday between oil producers about a potential crude freeze to bolster the faltering price of “black gold”.

The FTSE 100 has been tracking Brent closely over the last few months and its dip today — down by 51 cents to $43.33 a barrel —saw the blue-chip index drop 14.15 points to 6350.95.

Housebuilder Berkeley Group again bore the brunt of concerns about a slowdown in the luxury sector. The company’s share price backtracked 113p, or 3.8%, to 2863p, taking Berkeley’s decline during 2016 to above 20% as it closes in on the top flight’s biggest losers so far this year — namely Barclays, RBS, Ashtead, and the biggest casualty, Next, which has shipped a quarter of its value.

William Hill, off 4.4p at 329.1p, was hobbled by the mighty Goldman Sachs, which stripped the bookmaker of its buy rating following last month’s profit warning.

Meanwhile, investors became weary of retirement-home builder McCarthy & Stone, which retreated 13.1p to 253.9p with Tuesday’s half-year results in mind.

Finally, cyber-security firm Osirium Technologies became only the 11th company to float on AIM this year.

It raised £8.8 million by selling shares to institutions at 156p a pop — double what it had originally hoped to make. Osirium’s shares leapt to 183p.

It is especially good news for its broker, Panmure Gordon, 1p cheaper at 58p. The City outfit has been under pressure to do deals and get more IPOs across the line.

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April 16, 2016 |
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