Homeserve, the home insurance business, has been hit by a downgrade from analysts at UBS.
The bank has cut its rating from buy to neutral. Although it set a £16 price target on the company, in the market Homeserve's shares fell 75p to £14.25. UBS said:
"The shares have risen nearly 25% over the last three months versus the FTSE 250 which is up around 14%. We attribute the out-performance to a re-assuring set of 2009 results, the company's international performance and the announcement that the emergency services business will be disposed.
"Despite the economic slow down in the UK the company continues to believe it can drive UK policy growth. We have taken a more cautious view and have UK policies slightly down which makes us feel that numbers from the ongoing business are well supported.
"We do still see upside to the share price beyond £16 as we feel the market is yet to price in the International operations. However, given the state of the market we think [it] will wait for more progress on the international front before paying beyond our price target. Accordingly we downgrade the shares from buy to neutral."
Meanwhile, an opening rise on Wall Street has kept London shares bubbling along nicely. The ADP employment report was worse than expected, with a drop of 473,000 private sector jobs compared to expectations of a 395,000 decline. But US manufacturing figures came in above forecasts, so the Dow Jones Industrial Average has climbed more than 90 points ins early trading. As a consequence the FTSE 100 is up 86.13 points at 4335.34, while the FTSE 250 is up 79.77 points at 7494.33.
Miners continue to lead the way as metal prices edge higher on recovery hopes. Vedanta Resources is up 135p at £14.23 as it said it would increase its share buy back programme by 40% to $350m.
