It's been quiet lately at Mike Ashley's Sports Direct International, relatively speaking. But today one of its joint brokers, Merrill Lynch, has sparked some fun and games.
Merrill has cut its recommendation from neutral to sell, and as a result, the company's shares have fallen 5.25p to 96.5.
Commenting on the news, Jonathan Pritchard, at Oriel Securities, had this to say:
"In another amusing turn in the Sports Direct story, house broker Merrill Lynch has this morning turned seller of the shares (67% below the float price). This clearly increases nervousness before the interims which are due next Wednesday.
"Numbers are as always thin on the ground with this one, but we are concerned that even our 9p of earnings per share for this year will come under pressure as a forecast. It is almost impossible to ascribe a value to this creaking business and its model, but if we can apply a 20% discount to the sector multiple, even to the severely at risk 9p, we still get to a price target of 80p.
"Ashley tried buying in shares to prop up the shares price at 140p and it didn't work. It won't work down here either. Anyone holding this should swallow their pride and sell. It's a safe short too."
