Shares in 888 fall by 13 percent after the online gaming firm says it expects full-year profit to be significantly lower than market expectations reflecting a decline in poker revenue and an anticipated impact from the soccer World Cup keeping gamblers away from their computer screens.
Panmure analyst Simon French reduces his pretax profit forecast by 18 percent to $32.7 million and cuts his price target to 80 pence from 100 pence. However, he keeps a 'buy' recommendation, saying the fall in 888's share price increases the likelihood of it being taking over.
'We think the group's attractiveness as an M&A target will only increase with this warning,' he said.
KBC Peel Hunt analyst Nick Batram agrees: 'It could well accelerate any industry consolidation. We continue to believe that 888 is an attractive industry asset.'
Shares in Unilever gain 1.8 percent as UBS ups its rating for the household products firm to 'buy' from 'neutral', with an unchanged 2,025 pence price target, pointing out that the stock has significantly de-rated over the last 6 months.
UBS says, in a note, that since the start of April, Unilever has underperformed its US peers by, on average, 12 percent in dollar terms.
The broker says it suspects this partly reflects investors seeing Unilever as a proxy for the euro zone economy and its debt crisis, yet UBS estimates that Unilever's exposure to the euro zone to be only marginally higher than that of its US peers.
'We have never disputed there is a transformation taking place at Unilever; a streamlining of the organisation and a greater focus on customers/consumers means going forward Unilever is, in our view, less likely to seep share and more likely to set the agenda in its categories,' the broker says.
'What we have questioned is the extent of the resultant; pick-up in sales growth/profitability step-up. We believe, the current rating, and narrower premium to Nestle incorporates more realistic expectations,' UBS adds.
Shares in Forth Ports fall 13 percent after a trio of its shareholders walk away from making a formal offer, saying they can not improve on a rebuffed 640 million pounds ($926 million) approach.
The Northstream consortium, made up of infrastructure investors Arcus, Deutsche Bank's RREEF and Peel Group, said after market close on Thursday that in light of economic uncertainty and problems in valuing Forth's property portfolio they would not increase their latest offer of 1,400 pence a share.
'We are not surprised that the consortium felt unable to improve its terms and launch a formal offer, given the apparent refusal by the Forth Ports board to open the group's books for due diligence,' says Gerald Khoo, analyst at Arbuthnot, who cuts his target price to 1,100 pence from 1,470 pence to reflect the withdrawal of the potential bid.
'We also struggle to value the group's development land, and this remains a major variable in the group's valuation.'
The FTSE Small Cap Index adds 0.1 percent in early deals, tracking a similar 0.1 percent gain by the FTSE 100 index, while the FTSE 250 adds 0.6 percent, with trade fairly subdued ahead of the bank holiday weekend.
Independent oil and gas company Leed Petroleum rises 14.5 percent after issuing a bullish production update.
Internet gaming firm 888 Holdings falls 11.9 percent after saying it expects full-year profit to be significantly lower than market expectations with the impending soccer World Cup expected to further impact trading.
Shares in tour operators Thomas Cook Group and TUI Travel top the FTSE 100 leaders board, up 2.8 and 2.1 percent respectively, as Nomura upgrades its rating for both groups to 'buy' from 'neutral' in a review of the UK leisure sector.
Nomura says its more bullish view on the two blue chip travel firms is driven by around 5 percent EPS upgrades which leads it to raise its target prices for both - to 305 pence from 290 pence for TUI Travel, and to 280 pence from 255 pence for Thomas Cook.
'For both, we expect cash generation to become more significant beyond 2010. While we believe the big medium-term strategic questions remain, the valuation now looks to compensate,' the broker says.
In the leisure sector, Nomura says it prefers travel stocks over betting stocks.
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