FTSE 250 movers: Vedanta and Just Eat fall on broker notes

The FTSE 250 started the month in the red, down 68.05 points (0.41%) to 16,419.67 by mid-afternoon on Monday.

Vedanta Resources sank after Deutsche Bank cuts its target price for the mining company from 200p to 185p on lower than expected iron ore sales. The bank said Vedanta now expects to sell 3.5mt from the Goa mine, down from between 5mt and 5.5mt.

“[The company] is engaged on multiple fronts to resolve issues plaguing the high-cost mine: (i) with the state governments to lift mining caps, (ii) with the Government to remove the export duty on low grade Goan ore, (iii) with unions to settle transport tariff disputes, and (iv) with the Supreme Court to resolve duplication of taxes.”

The bank also signalled power costs are increasing which will impact profitability from this month. “The state electricity provider increased tariffs by 25% from 1 January 2016, which will apply to 70% of the electricity used by Vedanta, and take power from 20% of C1 costs to 25%, or add USc9/lb on our estimates. As a result we forecast Copper Zambia C1 costs to be USc176/lb in 4Q16 and average USc189/lb for the year.”

Just Eat also fell on the back of a broker note, after UBS initiated coverage at ‘sell’ with a target price of 330p. The investment bank said its Evidence Lab survey showed that taste and delivery speed were among the top four factors most valued by customers – factors that can’t be controlled by food delivery aggregators like Just Eat.

While the survey suggested that Just Eat is the leading takeaway aggregator in the UK and France, the number of competitor platforms and the impact on the company is underestimated. “We believe three-sided marketplaces that include a delivery element – like Deliveroo and UberEATS – represent more compelling solutions for both diners and restaurants, since they have greater control over quality and delivery times, and offer online access to restaurants that do not have delivery capabilities.”

Meanwhile Home Retail Group shares surged following a report that it was nearing an agreement with Sainsbury on the price the supermarket retailer will pay for the Argos owner.

Bloomberg cited people familiar with the matter as saying that a price of between 160p and 165p a share was being discussed and that the companies may seek an extension as they look to iron out the details. Sources said Home Retail might ask the UK’s Takeover Panel to extend the 2 February deadline by which Sainsbury needs to either announce a firm intention to make an offer or walk away. The sources said no final decision has been reached and negotiations may still fall apart. Sainsbury’s announced in January that it was still mulling an offer for Home Retail after its first approach for the FTSE 250 retail group in November was rebuffed.

Allied Minds also saw a boost to start the month, after Numis reiterated the stock at ‘buy’ in response to the company announcing a successful $22m (£15.4m) fundraising for its subsidiary Federated Wireless.

The US-based FTSE 250 science and technology developer invested $5m in the fundraising and the rest came from Woodford Investment Management. Allied Minds has increased its stake in Federated Wireless to 73% from 91%, boosting net asset value by $51m. The group said the proceeds of the funding would enable Federated Wireless to complete its Spectrum Access System (SAS) and Environmental Sensor Capability (ESC) certification, conclude the development and accelerate the commercialisation of its cloud-hosted CINQ platform, as well as conduct field trials in the second half of 2016 with its technology partners. “Allied Minds last reported a portfolio asset valuation of $488m with its FY14 results and we would expect this to be updated with the FY15 results for developments such as the Precision Biopsy fund raise in October 2015 and today’s news relating, leading to an uplift of $97m, before any other adjustments,” said Numis analyst Sally Taylor. “On this basis the stock is trading at 1.3x net asset value.”

FTSE 250 - Risers

Home Retail Group (HOME) 143.00p 4.61%
Allied Minds (ALM) 295.00p 4.46%
AO World (AO.) 157.80p 3.82%
UDG Healthcare Public Limited Company (UDG) 543.50p 3.72%
Card Factory (CARD) 358.30p 2.69%
Clarkson (CKN) 2,110.00p 2.68%
Hastings Group Holdings (HSTG) 164.20p 2.24%
Virgin Money Holdings (UK) (VM.) 322.50p 2.06%
Derwent London (DLN) 3,303.00p 1.98%
Nostrum Oil & Gas (NOG) 280.30p 1.93%

FTSE 250 - Fallers

Evraz (EVR) 58.40p -6.34%
Vedanta Resources (VED) 231.20p -5.28%
NMC Health (NMC) 920.00p -5.06%
IP Group (IPO) 178.90p -3.87%
Just Eat (JE.) 360.70p -3.40%
G4S (GFS) 219.20p -3.35%
Cobham (COB) 246.20p -3.07%
Greencore Group (GNC) 377.10p -3.01%
TalkTalk Telecom Group (TALK) 213.60p -3.00%
Synthomer (SYNT) 285.10p -2.80%