THE 2.4 billion disposal of Scottish Newcastle’s 1400-strong pubs chain to Spirit yesterday appears to have gone down about as well as a flat pint with the City.
A clutch of big broking houses have come out with some bearish comments on the brewer. UBS has downgraded the shares from buy to neutral and slashed its target price from 450p to 380p.
US securities house Goldman Sachs has repeated its underperform rating and cut its 2004 earnings forecast from 39p to 29p a share and its estimate for 2005 from 43p to 32p. It warns the disposal leaves the brewing business on a valuation which is too high compared with European rivals.
The dividend is being financed out of debt, Goldman adds.
Lehman Brothers is reputed to have lowered its target price on the shares to 340p, compared with today’s price of 3523/4p, down 31/ 4p.
Share prices generally continued to drift in thin trading as investors fretted about the worsening situation in the Middle East. Small gains for the Dow in New Yo rk overnight failed to have any influence. The FTSE 100 index fell 6.3 to 4263.8.
The ITV merger twins continued to tick better ahead of the Government’s all-clear on the deal. Granada firmed a further 21/2p to 1051/2p, while Carlton Communications was 81/2p better at 1901/ 2p. Both companies’ shares raced ahead yesterday as fears were brushed aside that the Trade and Industry Secretary Patricia Hewitt may impose conditions on the deal relating to their advertising operations.
A rise of less than 1% in like-forlike sales at Marks Spencer failed to impress and left the price nursing a fall of 63/4p at 309p.
Defence contractor BAE Systems was marked 23/4p higher to 1823/ 4p following an upgrading of the shares by broker UBS. It has raised its rating from neutral to buy and raised its 12-month target price from 165p to 210p.
Gas distributor Centrica firmed 1/2p to 1893/4p. Broker Merrill Lynch has raised its recommendation from neutral to buy and has set a target price of 215p. The broker says the group’s strategic re- focusingand investment in customer relationship management should improve margins. The biggest threat to growth comes from wholesale power and gas markets although this will be partly offset by falling oil and gas prices.
Yet another dramatic twist was recorded in the tale of Manchester United, 91/2p better at a threeyear high of 2441/2p, as it emerged that Rupert Murdoch’s BSkyB has sold its entire 9.9% stake in the Premier League side.
The sale was the first trade of the day in the shares and saw Goldman Sachs pay 239p (62 million) for the 25.95 million shares.
The move follows further stakebuilding. Malcolm Glazer, owner of the NFL’s Tampa Bay Buccaneers, last week doubled his stake to almost 6% and several other large parcels of shares changed hands. Irishmen JP McManus and John Magnier are believed to have increased their 11% holding after hedge fund Lansdowne sold 2.2 million shares yesterday.
Celltech marked time at 3693/4p despite broker ING turning buyer following a review of the European market for auto-immune diseases.
ING, which had rated Celltech a hold, said one of its development drugs could dominate the rheumatoid arthritis market.
