FTSE 100 movers: Burberry gains on RBC upgrade; Capita slumps again

London’s FTSE 100 index was down 0.5% to 6,882.91 in afternoon trade.

Luxury fashion retailer Burberry was on the front foot after RBC Capital Markets upgraded the stock to ‘sector perform’ from ‘underperform’ and lifted the price target to 1,400p from 1,200p as it upped its earnings per share forecasts, largely due to a bigger FX tailwind.

The bank said Burberry's equity story is now centred on driving retail productivity in a modest growth environment and leveraging its digital edge to expand into e-commerce.

“FY17 should be difficult but GBP weakness provides a welcome breathing room. We see Burberry moving faster than peers to adapt to millennial consumer behaviour changes and recent management shake-up should support the stock into next year.”

Gold and silver miners Randgold Resources and Fresnillo were also in the black, with precious metals bouncing as investors fled to safety amid worries about the banking sector.

On the downside, Capita was under the cosh for the second day running after the outsourcer warned on Thursday that full year-profits will be some way short of current forecasts after its third quarter was hit by a slowdown in some areas, oneoff costs and recent hesitation among clients.

The group said revenues would grow 4-5% in the calendar year and that underlying profit before tax would be between £535m and £555m, 5-9% short of last year and 10-13% shy of current City forecasts.

Having in July expected organic revenue growth of around 4% for the full year, it is now expected to be nearer 1% with operational gearing resulting in substantial slowdown, and could be even worse if it does not successfully resolve its contract dispute with the Co-op Bank.

Peer Babcock also declined again on the back of Capita’s profit warning.

Lloyds Banking Group and Barclays were weaker amid worries about the banking sector at the end of what has turned out to be a turbulent week for Deutsche Bank.

The German lender tumbled again in early trade following reports late on Thursday that a number of key funds had withdrawn money from the bank, which is currently facing a $14bn fine from the US Department of Justice for mis-selling mortgage-backed securities.

However, shares in DB recovered somewhat following reports of a letter sent to the bank’s employees by chief executive John Cryan. He was understood to have said that recent media speculation that a group of hedge funds were reducing their exposure was “causing unjustified concerns” and that the bank has “strong fundamentals”.

Risers

Burberry Group (BRBY) 1,378.00p 1.85%
Randgold Resources Ltd. (RRS) 8,015.00p 1.65%
Persimmon (PSN) 1,769.00p 1.61%
Fresnillo (FRES) 1,837.00p 1.49%
Barratt Developments (BDEV) 479.90p 1.48%
InterContinental Hotels Group (IHG) 3,157.00p 0.99%
Pearson (PSON) 755.50p 0.80%
ITV (ITV) 186.00p 0.76%
Reckitt Benckiser Group (RB.) 7,258.00p 0.74%
DCC (DCC) 6,980.00p 0.72%

Fallers

Capita (CPI) 663.00p -5.01%
Babcock International Group (BAB) 1,021.00p -2.39%
Rio Tinto (RIO) 2,573.00p -2.32%
Lloyds Banking Group (LLOY) 54.26p -2.22%
Aviva (AV.) 434.80p -2.01%
Hikma Pharmaceuticals (HIK) 2,008.00p -2.00%
Sky (SKY) 892.50p -1.98%
Barclays (BARC) 164.15p -1.88%
St James's Place (STJ) 947.50p -1.81%
Prudential (PRU) 1,365.50p -1.80%