With leading shares falling for the fourth day in a row, pharmaceuticals company Shire bucked the trend.
The company jumped 136p or 3% to £45.65 after a positive response to its investor day on Wednesday. Analysts at Jefferies said:
The R&D day provided the first opportunity to meet a broad selection of senior management within Shire and we were impressed by clear strategic direction and rational development plans. We also gained visibility on Shire’s early-stage research and technology platforms, as it highlighted its 22 product pipeline. We came away with the view that there is more value in the pipeline than is ascribed in the current $41bn valuation.
Credit Suisse kept its neutral rating but raised its net present value on the business:
Management kept the broad $10b revenue by 2020 made up of $7b from marketed and $3b from new drugs. Since the target was set, there has been some delay to SHP465 and more FDA discussions regarding lifitegrast. Management stated that the $3n does not include new acquisitions, early development, or business development.
We have made minimal changes across the late- and early-stage portfolio to launch timings, peak sales expectations, and risk-adjustments. The net effect is to increase total ..net present value from £30.81 to £31.41.
Overall the FTSE 100 lost its early gains, weighed down by commodity stocks in the wake of the weak oil price, albeit Brent crude edged higher from its recent low. The dominance of mining companies in the index meant the UK market was a worse performer than the German and French markets.
But with Wall Street up 200 points or so by the time London closed, the UK index also recovered from its lowest level to end down 38.34 points at 6461.70. Continuing worries about the eurozone after the unexpected Greek presidential vote next week combined with problems in Russia, where a 1% interest rate hike had little effect on the continuing slide in the rouble.
On the positive side, US retail sales for November rose 0.7%, prompting a positive response on the Dow Jones Industrial Average.
Among the commodity company fallers, Glencore lost 11.45p to 294.85p despite the company saying it would focus on returning cash to shareholders if it found no better way of using it.
Fresnillo fell 25p to 745p while Anglo American dropped 34.5p to £11.73.
Elsewhere Aberdeen Asset Management ended 14.7p lower at 423.9p as its shares went ex-dividend.
But Legal & General climbed 5.3p to 246.6p after a positive note from Nomura.
Among the mid-caps, telecoms testing equipment group Spirent climbed 5.05p or nearly 8% to 71.20p after UBS moved from neutral to buy. In a note on the technology hardware sector it said:
M&A was a feature in global and European tech in 2014 (Wolfson, CSR...) and we expect 2015 to be similar with possible areas of focus being mapping/telematics, test and measurement and optical networking.
We believe Spirent’s valuation is now such that it warrants a buy. The stock screens well for M&A and is trading at trough price/book. We remain convinced in the quality in Spirent’s business model.
Liberum was also positive, with Eoin Iambe saying:
Spirent is a recovery play. As markets improve in 2015 the shares could perform well given the high operational leverage. The testing space would benefit from consolidation. Despite the recent headwinds we still believe Spirent is addressing a growing market. As revenue rebounds, Spirent share price could perform well given the high operational leverage. We believe Spirent’s customers will start to re-invest in the second half of 2015. We could see the positive side in 2015 as revenue growth returns.
Finally SRT, the Aim maritime technology business, rose nearly 3% to 24.5p after it signed a deal with Greenfinder in Malaysia to supply its fishing fleet tracking systems.
