Car dealer Inchcape - which last week unveiled a deeply discounted £249m rights issue at just 6p a share - has edged up 0.25p to 67.75p.
Analysts at Citigroup have raised their recommendation on the company from hold to buy in the wake of the fundraising. They said:
"For the first time in 24 months, we believe Inchcape has a fit for purpose capital structure and realistic forecast agenda. We upgrade to buy with a new 88p target. This equates to an ex rights target price of 16p."
But Panmure Gordon was less convinced. The broker said the cash call eased balance sheet worries, but the shares had run ahead of themselves. Analyst Mike Allen said:
"We had Inchcape in for a sales meeting last night to run through its future prospects post its recent fund raise. While the future of the business is now secure, with a much more appropriate capital structure to match current fundamentals in its key markets, we are unlikely to see an earnings recovery until 2011. On the back of last week's results, the shares have rallied hard causing us to switch our recommendation from buy back to hold."
