FTSE 100 movers: DS Smith rallies on JPM note; Hargreaves drops on results
London's FTSE 100 was up 1.6% to 6,855.15 in afternoon trade on Tuesday ahead of the parliamentary vote on Theresa May's Brexit 'Plan B'.
DS Smith was the standout gainer as JPMorgan Cazenove reinstated coverage of the stock at 'overweight' with a 400p price target following completion of its acquisition of Europac.
JPM noted that DS Smith has de-rated to 6.1x FY1 EV/EBITDA from an average of 8.3x over the past three years, likely reflecting paper price trends and downward revisions to GDP growth in key end-markets.
"It has underperformed most of its major peers in paper and packaging over the past 12 months, despite the protection its ‘short paper’ operating model provides to margins. At a FY20 estimated free cash flow yield of 10%, we believe the derating has been overdone and resume coverage with an overweight rating."
British American Tobacco was also a high riser following an upgrade to ‘overweight’ from 'neutral' by Piper Jaffray, with Imperial Brands following close behind.
Jaffray said the valuation was attractive at current levels and patent litigation over the Glo e-cigarette in Japan may be less of a risk than it originally believed. It also said the risks of the US menthol cigarette ban look priced in and there is no risk to dividend growth.
Sainsbury's was in the green as UBS upped its price target on the buy-rated stock to 435p from 400p, while ITV rallied as Credit Suisse reiterated its 'outperform' rating on the broadcaster.
On the downside, pensions and investment platform Hargreaves Lansdown lost ground as it reported a 24% drop in net new business for the first half and a 6% decline in assets under administration.
Halma fell after a downgrade to 'hold' from 'buy' at Berenberg, mostly on valuation grounds.
"While we see upside risk to earnings, we think shares are more likely to grow into its multiple rather than see any expansion in the near term," Berenberg said.
Anglo American was on the back foot after saying that the value of rough diamond sales at its De Beers unit fell in the first sales cycle of 2019.
FTSE 100 - Risers
Smith (DS) (SMDS) 334.60p 4.92%
British American Tobacco (BATS) 2,490.50p 4.86%
Fresnillo (FRES) 969.00p 2.93%
Kingfisher (KGF) 228.00p 2.89%
Croda International (CRDA) 4,885.00p 2.82%
Imperial Brands (IMB) 2,425.00p 2.69%
Sainsbury (J) (SBRY) 286.40p 2.65%
International Consolidated Airlines Group SA (CDI) (IAG) 639.40p 2.63%
ITV (ITV) 131.65p 2.57%
Glencore (GLEN) 298.75p 2.50%
FTSE 100 - Fallers
Hargreaves Lansdown (HL.) 1,700.12p -5.39%
TUI AG Reg Shs (DI) (TUI) 1,181.00p -1.13%
Halma (HLMA) 1,385.00p -1.07%
easyJet (EZJ) 1,280.00p -1.01%
Hiscox Limited (DI) (HSX) 1,433.00p -0.56%
CRH (CRH) 2,209.70p -0.42%
Paddy Power Betfair (PPB) 6,060.00p -0.41%
Anglo American (AAL) 1,859.00p -0.28%
BT Group (BT.A) 235.35p -0.28%
Prudential (PRU) 1,482.30p -0.25%