TRADERS PILED into Carphone Warehouse yesterday and those caught with short positions in the stock were heard to be busily closing them ahead of tomorrow’s trading statement. According to yesterday’stalk, Carphone’s update will not disappoint the market. Although it is not expected to contain any profit or sales figures, the statement will provide connection and customer base numbers for thegroup’s key divisions. A presentation to analysts focusing on progress at Carphone’s relatively new fixed line unit, TalkTalk, will follow the statement.
“We expect Carphone’s trading statement for the three months ending September to provide more proof of the robust trading in each of its key divisions. Attention will centre on TalkTalk, given the continued buzz around carrier pre-select and the fact that Carphone has decided to follow the statement with a City presentation on this division,” Investec Securities predicted. Customer numbers at TalkTalk are likely to have broken through the 150,000 level. At the end of July they stood at 108,000 and if there are to be upgrades to forecasts for the group they are likely to be driven by the success of this relatively new addition to the company. Those short of Carphone stock in recent months will have without doubt suffered severe financial pain. In April dealers reported heavy shorting of the telecom group’s shares amid concerns that the company would struggle to meet market expectations. Back then the stock traded at about 65p. Yesterday it moved 6.25p better to 132p.
Elsewhere, J Sainsbury rose 5p to 277p as WestLB restarted coverage of the struggling supermarket group with a “buy” rating. The German broker is not expecting anything particularly upbeat from the group when it issues a trading statement this week. In fact WestLB expects yet another decline in like-for-like sales, however it believes that a turnaround is possible at the group. It views the current crisis at Sainsbury’s as similar to that which faced Asda in the early-Nineties. Asda was eventually regenerated and sold to Wal- Mart in 1999. WestLB set a 300p price target on Sainsbury’s shares.
Meanwhile, ABN Amro was heard to be moving its clients into Cadbury Schweppes ahead of an upcoming seminar to investors. Cadbury shares trade at a significant discount to rivals Nestle and Danone and yet the broker expects the group to deliver the fastest-growing profits in the sector over the next three years. At its 27 October seminar, ABN expects Cadbury will reassure investors about the integration of its Adams acquisition and stress that cost and revenue synergies targeted are on track to be met. The FTSE 100 index lost 3.9 points to 4,270.1 while the FTSE 250 gained 36.0 to 5,628.5.
Takeover talk continued to surround Manchester United, which soared 8 per cent, or 17p, to 235p. Dealers suggested that Malcolm Glazer, the owner of the Tampa Bay Buccaneers American football team, has been adding to his stake. At the last count it stood at 5.19 per cent. However, there was evidence of profit taking following the amazing jump in the value of the club over the past year. The hedge fund Lansdowne Partners announced that it had cut its stake to 5.17 per cent from 6.03 per cent.
Northgate gained 13p to 545p on talk that pricing pressures at the group have eased over the past month, boosting margins. At the start of last month shares in the van hire group were hit by concerns that it was facing stiff pricing competition. Westbury was in demand, rising 1.5p to 421p, as gossips talked of better-than- expected trading for the house builder in the Midlands and the North of England.
Cenes Pharmaceutical added 0.75p to 5.62p after Alan Goodman, the chairman, disclosed the purchase of 250,000 shares at 4.5p each, taking his total stake to 6.8 per cent. Kewill Systems was steady at 47p despite whispers that today’s trading update from the software group is likely to contain news of several contract wins for the group’s Kewill Trade product. Kewill is forecast to issue a confident trading statement with brokers tipping the group to return to the black for the first half of its year.
Air Music & Media, which owns the rights to various pop songs, added 1.25p to 9.75p on whispers that an acquisition is on the cards in the near future. Brewin Dolphin gained 2.5p to 80p, Evolution Group added 4p to 90p and Durlacher jumped 15p higher to 144p amid a growing belief that trading conditions have very much improved for traditional stock brokerages.
Goshawk ticked 1p higher to 30.5p, in brisk trade, amid talk that the Lloyd’s insurer is looking increasingly exposed to a bid. A profit warning from the group last month pretty much halved its market value.
Medical Marketing International jumped 15p to 50.5p following a bullish update on the development of Viratis treatment for HIV. The group described Viratis as a “new and potential breakthrough treatment for HIV/Aids”.
Lastminute.com rose 11p to 269.5p on reports that it could be targeted by the US media mogul Barry Diller.
