Leading shares are heading lower again, with Pearson one of the biggest losers so far.
The educational publisher is down another 14.5p to 890.5p after slumping last week in the wake of a profit warning, which it blamed on a slowdown in enrolments to US colleges and weaker text book sales in South Africa. The company has been selling off divisions such as the Economist and the Financial Times to concentrate on its educational business but this is now currently struggling.
The latest catalyst is a downgrade from Credit Suisse, which has moved from outperform to neutral and slashed its target price from £14.55 to 970p. The bank’s analysts said:
Whilst we continue to see the potential for longer term upside for the group as it makes the digital migration, we believe these results demonstrate that it is no longer possible to have any meaningful conviction in the group’s short-medium term trading and as such we no longer believe its assets deserve a premium to its more stable professional publishing peers. As such, we downgrade the group to neutral.
Overall the FTSE 100 has fallen 24.21 points to 6392.81, ahead of an expected dip in UK GDP and as the US Federal Reserve begins its latest rate setting meeting. No change is expected this month but investors will be looking for clues as to whether the Fed may raise rates later this year.
With continuing worries about China, commodity companies are under pressure again. BHP Billiton is down 16.5p at 1114.5p while Anglo American has lost 7.9p at 583p.
But BP is 6.25p better at 390.65 after its third quarter earnings of $1.8bn beat expectations of a $1.2bn figure, and it unveiled further spending cuts to cope with the weak oil price.
St James’s Place also benefited from a positive reaction to its latest update, rising 10.5p to 941p. The wealth management group reported a 17% rise in net inflows in the third quarter.
Elsewhere TalkTalk - hit hard after last week’s cyber-attack - has recovered 17.7p or nearly 8% to 243p as a 15 year old schoolboy was arrested.
Lower down the market ValiRx has dipped 0.5p to 25.5p despite the life science company signing a three year collaboration deal with Finnish group Pharmatest to develop further products and compounds from its proprietary technology. Analysts at Northland Capital Partners said:
ValiRx takes a low-risk approach to cancer drug development: by outsourcing much of its drug development work to contract research organisations the company has flexibility in quickly terminating any struggling research programmes. The agreement with Pharmatest further supports this strategy. Moreover, the agreement is on favourable commercial terms to ValiRx, requiring no immediate payments to Pharmatest for providing services.
