FTSE 100 movers: Ocado rallies on M&S news; Micro Focus dented by downgrade
London's FTSE 100 down 0.8% to 6,753.80 in afternoon trade on Monday, with Ocado bucking the trend.
Micro Focus took a hit as Goldman Sachs downgraded the stock to 'neutral' from 'buy' following outperformance. It noted that since being added to the 'buy' list on 13 November 2018, the shares are up 15% versus the FTSE World Europe down 2.1%.
"Our view that sell-side estimates have likely bottomed and ongoing & future capital returns should come to the fore remains unchanged. We continue to believe that realisation of cost synergies from the ongoing HPE software M&A integration should result in a significant margin uplift in FY19 and FY20. Having said that, we see higher upside elsewhere in the sector," GS said.
On the upside, Ocado surged following a report over the weekend that it has held secret talks with Marks & Spencer over the launch of a food delivery service that could mark the end of its tie-up with Waitrose. M&S shares were also up.
Russ Mould, investment director at AJ Bell, said: "Reports suggest Marks & Spencer is interested in buying some of Ocado’s distribution centres and delivery vehicles. In essence it would buy the part of the group currently powering Waitrose’s deliveries.
"Such a move would be another tick in the box for Ocado which is adding relationships with supermarkets in several parts of the world. Its core focus is now selling technology expertise to the food retail sector rather than running physical delivery operations.
"For Marks & Spencer, having a stronger delivery network would give it a new way in which to try and boost earnings. There is no guarantee this would be the magic solution to fix its declining profits but it would put the business on a more level pegging with some of its key competitors."
Coca-Cola was the second-biggest gained after Goldman Sachs upgraded the stock to 'buy' from 'neutral' and lifted the target price to 2,950p from 2,530p.
Next was on the rise as Morgan Stanley upped its stance on the retailer to 'equalweight' form 'underweight' on valuation grounds.
Rio Tinto and BHP Group were also higher as Jefferies said in a note that Chinese demand for iron ore will rise. The bank lifted its price targets for both stocks.
FTSE 100 - Risers
Ocado Group (OCDO) 968.84p 2.37%
Coca-Cola HBC AG (CDI) (CCH) 2,534.00p 1.81%
InterContinental Hotels Group (IHG) 4,328.00p 1.66%
Marks & Spencer Group (MKS) 294.80p 1.66%
Centrica (CNA) 137.05p 1.48%
Spirax-Sarco Engineering (SPX) 6,320.00p 1.28%
Rio Tinto (RIO) 3,922.00p 1.13%
Paddy Power Betfair (PPB) 6,085.00p 1.00%
Next (NXT) 4,822.00p 0.94%
BHP Group (BHP) 1,624.20p 0.92%
FTSE 100 - Fallers
Imperial Brands (IMB) 2,341.00p -3.26%
Micro Focus International (MCRO) 1,453.00p -2.68%
Barclays (BARC) 160.70p -2.07%
Melrose Industries (MRO) 160.65p -1.95%
ITV (ITV) 129.70p -1.74%
British American Tobacco (BATS) 2,351.00p -1.71%
Experian (EXPN) 1,873.50p -1.65%
BP (BP.) 499.00p -1.56%
Hiscox Limited (DI) (HSX) 1,448.00p -1.50%
Antofagasta (ANTO) 815.60p -1.40%