FTSE 250 movers: Acacia shines; M&B hit by downgrade

London’s FTSE 250 index was up 0.2% to 18,797.78 in afternoon trade.

Acacia Mining shone after saying it returned to profit in the final quarter of 2016 as 2017 gold production increased to between 850,000-900,000 ounces at lower costs of $880-$920 per oz.

Virgin Money was a high riser as RBC Capital Markets initiated coverage of the stock at ‘outperform’ with a 415p price target.

“VM is a unique bank with low interest rate sensitivity and low risk profile which we believe can take market share and outperform in an uncertain economic environment. Consensus estimates are too bearish in our view on margin, growth and cost of risk.”

RPC Group was also on the front foot as Credit Suisse reiterated its ‘outperform’ rating and raise its price target on the stock to 1,175p from 1,129p, reflecting its expectations of the benefits of recent completed and announced acquisitions and a better-than-expected third-quarter performance. We lower our 2017E by 1%; raise 2018E and 2019E by 1% and 3%, respectively.

Drax was boosted as JPMorgan Cazenove moved to an ‘overweight’ rating on the stock, which was previously not rated, and rated at ‘neutral’ before that.

It said a new strategy, the acquisition of Opus Energy, and State aid approval for its biomass CfD by the European Commission put Drax on a path to a more sustainable, predictable and profitable future.

JPM said that according to its analysis, the recently-approved acquisition of Opus Energy is accretive to earnings and valuation and refreshing its estimates gives rise to earnings per share upgrades of around 30% on average from 2017.

Pub group Mitchells & Butlers was under pressure after Canaccord Genuity downgraded the stock to ‘hold’ from ‘buy’ and cut the price target to 285p from 350p.

The brokerage said M&B’s reasonable return on invested capital and balance sheet strength rankings are not enough to offset poor free cash flow conversion and earnings growth scores, which result in a bottom quartile ranking on its investment screen.