As investors await the expected news of quantitative easing from the European Central Bank on Thursday, markets have been buoyed by some positive trading news.
Publishing group Pearson - joint owner of Penguin Random House - is leading the FTSE 100 higher, up 57p to £12.93 after a better than expected performance. It gave a higher than predicted forecast for 2014 earnings and said it expected to return to growth in 2015 after a couple of problematic years, helped by a good performance from its North American business.
Analysts at Jefferies said:
[There is] perhaps more focus than normal on the statement today, as Pearson gave a preliminary guide for 2015. First, 2014 is a tad better than consensus, adjusted earnings per share 66p versus consensus 64p, Jeffries estimate 67.0p.
The guide also better we think, consensus on 75p for 2015, the guide 75p to 80p, Jefferies estimate 77.4p. So, 204 better, the 2015 guide better, though we note the underlying tax rate assumption, just 17%.
SABMiller is up 69p at £34.12 after the brewer unveiled a 4% rise in third quarter revenue despite weakness in China.
With oil edging higher - Brent crude is up 1.46% at $48.69 - energy companies are also helping to support the market. BG is 13.6p better at 862.9p and Royal Dutch Shell B shares have climbed 36p at £22.12.
Elsewhere Unilever has recovered 49p to £27.62 following Tuesday’s dip in the wake of its latest figures.
Arm has added 17p to £10.45 as Citigroup raised its rating from neutral to buy and its target price from 850p to £12.
But Sports Direct International has fallen 34p to 726.5p after founder Mike Ashley sold £110m worth of shares at 720p each.
Dixons Carphone, a volatile market in the run up to its latest trading update, is down 0.9p at 441.3p despite raising its full year guidance after a strong festive period, although it admitted Black Friday’s success had hit trading in the following weeks. But its Boxing day sale also broke records.
Overall the FTSE 100 is currently 40.18 points at 6660.28, as UK jobless rate fell to 5.8% in the three months to November, down from 6% in the previous quarter.
Among the mid-caps, hedge fund group Man has climbed 10.2p to 171.7p after Morgan Stanley raised its price target from 120p to 165p. The bank said:
We think consensus underestimates 2014 performance fees and associated capital return potential; our bottom-up analysis sees fees around 30% higher than consensus.
We think Man could announce a $220m buyback, giving a yield of around 9% yield for 2015, which with continued AHL [fund] momentum year to date could support the stock.
But Domino’s Pizza has fallen 25p to 673.5p following news that its finance director Sean Wilkins had left with immediate effect. It also said full year profits were expected to be slighly ahead of expectations. Nick Batram at Peel Hunt said:
After a little more than a year, Sean Wilkins is to leave his position as group chief financial officer with immediate effect. This does come as a surprise. Under Sean the disclosure had improved, while the financial team has been strengthened. However, Sean was appointed by the previous chief executive and our reading of the situation is that the move is down to chemistry.
We see no reason to move from our hold recommendation despite this morning’s surprise move. 2015 faces tougher like for like comparisons but with benign cost outlook we still expect the group to deliver solid numbers – and this is reflected in the valuation.
