Directories group Yell has been under pressure this year on concerns about its future growth. So much so it was recently relegated from the FTSE 100. But the shares are looking a little brighter after positive results from a US rival.
Idearc has just reported first quarter profits had risen by a better than expected 8%, helping lift Yell by 14.5p to 190.25p.
But not everyone is convinced. UBS has today issued a sell note on Yell with a 150p share price target.
Analyst Polo Tang said: "Idearc shares rose 30% after the results, but [they] are highly volatile and we would be wary of making a positive read across to Yell with Idearc shares having been hit harder in the downturn and expectations for Idearc significantly lower than Yell."
He said conditions in the US remained challenging. "We see downside risk to Yell consensus estimates for the US.
"Yell will report full year results on 20 May - we see a risk it will pull its dividend for March 2009 and that consensus earnings per share will be revised downwards. Potential restructuring benefits may help cushion cashflows but we believe medium-term liquidity and covenant issues remain."
Hopes of a UK interest rate cut tomorrow after more poor economic figures - consumer confidence and manufacturing output both weaker - helped housebuilders to recover some of their recent weakness. Persimmon added 22.5p to 611p, while Barratt Developments rose 13.5p to 280.75p.
So the FTSE 100 is up 41.7 points at 6256.9 while the FTSE 250 is 122.7 points better at 10,451.7.
