FTSE 250 movers: Elementis surges; Berendsen drops on downgrade

London’s FTSE 250 was up 0.2% to 17,621.05 in afternoon trade.

Chemicals company Elementis surged after confirming it expects overall earnings for the year to be in line with market views. The group said on Friday that sales for specialty products rose in the third quarter but the chromium business remained “challenging”.

Sales from specialty products rose 4% from the same quarter last year, or 6% on a constant currency basis.

Electrocomponents was a high riser as Liberum initiated coverage of the stock at ‘buy’ with a 420p price target, which implies total return potential of 18%.

The brokerage said the arrival of a new management team last year has had a dramatic impact on the company’s fortunes. The implementation of a new three-year restructuring programme, alongside initial signs of delivery, has seen the shares surge more than 50% so far this year.

“Despite this strong share price performance we believe that the potential upside from this strategy is yet to be fully reflected. Beyond this we also see structural opportunities from its unique position in both the industrial and electronic markets to drive long-term shareholder value.”

Housebuilders Redrow, Galliford Try, Bovis and Bellway were all on the front foot, with traders pointing to a media report that privately-owned housebuilder Cala Group has been approached about a takeover by a mystery Chinese bidder ahead of a government push to deliver one million new homes by 2020.

According to Sky News, Cala is in early-stage talks with the potential buyer, which is understood not to be Vanke Group, the country's biggest residential developer.

On the downside, Berendsen was under the cosh a day after it issued a profit warning, as HSBC downgraded the stock to ‘hold’ from ‘buy’.

Unite Group was also hit by a broker note, as Morgan Stanley downgraded its stance on the company to ‘underweight’ from ‘overweight’ and cut the price target to 590p from 700p. It said that while fundamentals are holding up for now, several headwinds could affect student numbers medium to long term.

The bank reckons international student numbers will decline as a result of potentially stricter visa rules for non-EU students, who make up 25% of Unite’s tenants, and because EU students, which make up 9% of Unite’s tenants, face tuition fee hikes following the Brexit vote. It noted that university applications from EU students following Brexit are already down 9% for the academic year starting September 17.

In addition, it pointed to falling affordability for UK students and highlighted of over-supply and softening yields.

Risers

Elementis (ELM) 237.90p 10.91%
Electrocomponents (ECM) 382.40p 5.00%
Just Eat (JE.) 529.00p 4.44%
Redrow (RDW) 384.20p 3.17%
Galliford Try (GFRD) 1,247.00p 3.06%
Hastings Group Holdings (HSTG) 216.20p 2.95%
Crest Nicholson Holdings (CRST) 410.70p 2.93%
Bovis Homes Group (BVS) 770.00p 2.46%
Bellway (BWY) 2,414.00p 2.33%
Inchcape (INCH) 657.00p 2.10%

Fallers

Berendsen (BRSN) 986.00p -4.27%
Hunting (HTG) 488.50p -4.22%
Unite Group (UTG) 559.00p -3.95%
Kaz Minerals (KAZ) 290.60p -3.81%
Amec Foster Wheeler (AMFW) 449.40p -3.54%
Safestore Holdings (SAFE) 359.00p -2.95%
Softcat (SCT) 322.40p -2.72%
Evraz (EVR) 205.40p -2.70%
CLS Holdings (CLI) 1,535.00p -2.42%
Entertainment One Limited (ETO) 230.70p -2.33%