Market report: Tough task for Mitie's new chief as shares dip furtherComments Off on Market report: Tough task for Mitie's new chief as shares dip further
If Phil Bentley was hoping to get Mitie back in the City’s good books when he takes over as chief executive, he faces an uphill battle.
Today, investors heeded calls from a key stockbroker to keep dumping the beleaguered outsourcer’s shares.
Bentley, who stocked up on £3.6 million of Mitie shares two weeks ago, starts his turnaround job on Monday, taking over from Baroness McGregor-Smith, the so-called “prickly peer” who rubbed analysts up the wrong way when she cut off contact with the more bearish tipsters after the first of two profits warnings.
Today Investec, despite hailing the proposed sale of its healthcare arm, predicted the shares will continue to slide under Bentley, downgrading Mitie for the second time in three months, this time to Sell.
Investec’s Daniel Cowan was full of praise for Bentley, arguing that his 176p target price would have been even lower had it not been for his arrival, but is concerned by the triggering of Article 50 Brexit talks next year, national living wage increases, and tight social housing budgets.
The bears were back in the money as shares in the company, one of the most shorted stocks on the LSE, which currently has no analysts backing it, fell 8.2p or 3.8% to 207.3p.
The decline was exacerbated when house broker UBS gave its forecasts a haircut.
Yesterday’s market rally was followed by muted trading on the FTSE 100, which dipped 5.40 points to 6896.83 as investors waited for the European Central Bank to decide whether to increase monetary stimulus.
Strong half-year results from DS Smith lifted the packaging giant 15.6p, or 4%, to 411.6p, with pre-tax profits beating analyst forecasts, up 60% at £146 million.
On AIM, healthy annual results drove social care provider CareTech to a new high for the year as it surged 16p to 307p.
Shares in African Potash, the fertiliser exploration company floated on AIM by ex-England cricketer Phil Edmonds and his business partner Andrew Groves, were suspended after Cantor Fitzgerald quit as its nominated adviser, or nomad, the business which has the responsibility of regulating a company’s announcements.
That gives it a month to find a replacement or be axed from the junior market.
African Potash, down 97% this year, has relied on expensive loans from the finance director’s wife.
Shore Capital analyst Yuen Low said: “We look forward with much curiosity to learning the identity of the nomad that is apparently possibly sufficiently brave (or desperate) to risk its reputation in sticking its head above this particular parapet.”