Shares in Man Group top the FTSE 100 fallers list, dropping 13.9 percent to extend recent falls following last week's first half results, with Citigroup cutting its rating for the hedge fund manager to 'hold' from 'buy'.
The broker says it has cut its EPS estimates for Man Group by 6 percent for full year 2008/09 and by 22 percent for full year 2009/10 to reflect lower assets under management.
Citigroup points out that Man Group' s near-term outlook depends on one 'engine' of growth, its AHL hedge fund.
Having even one engine puts Man Group in a better position than its peers, Citigroup thinks, but, in its view, more AHL also means more earnings volatility for the firm.
Citigroup notes Man Group has $1.5 billion surplus capital and a 14 percent free cashflow FCF yield, which supports a 12 percent dividend yield for investors while they wait for a share price recovery.
But the broker says that with negative earnings momentum and challenging asset under management trends, it is hard to see what will trigger recovery in the stock in the near term.
Citigroup has reduced its price target for Man Group to 265 pence from 570.
Shares in Fulcrum Pharma soar 41 percent after the regulatory consultancy announces a shift in strategy which is seen helping it withstand the financial crisis.
'This strategic focus differentiates Fulcrum from a conventional consultancy firm, particularly in the strong area of regulatory services. This bodes well for Fulcrum's growth sustainability,' Seymour Pierce analyst Zhining Xu says.
Britain's FTSE 100 gains 1.5 percent by midday as defensives forge higher and a grim inflation report from the Bank of England spurs investors' hopes of seeing further interest rate cuts.
At 1130 GMT, the FTSE 100 was up 63.1 points at 4,309.79 points. The index fell 3.6 percent on Tuesday as investors faced with a global economic slowdown continued to dump stocks.
Among defensives, pharmaceuticals GlaxoSmithKline, AstraZeneca and Shire put on between 1.6 and 3.8 percent. Tobacco groups Imperial Tobacco and British American Tobacco both add more than 3 percent, with BAT helped by a Goldman Sachs upgrade.
Shares in International Ferro Metals slide as much as 19 percent after the company says it will slash output and postpone planned investments in the business due to a slump in demand for stainless steel.
'Management has made very sensible decisions, given market conditions, however the production cuts and weak sales will likely result in earnings downgrades,' says Investec analyst Rebecca O'Dwyer. 'Our forecasts, target price and recommendation are under review.'
Fairfax mining analyst John Meyer, who recently downgraded his valuation on IFM due to a likely collapse in ferrochrome prices, says Wednesday's statement demonstrates a rapid response by management.
'We may make some minor adjustment to our forecasts.' Meyer says. 'Any reasonable recovery in demand for stainless steel and world markets in general should cause us to look to upgrade our numbers in time.'
Shares in Meridian Petroleum, the AIM-listed oil and gas E&P company, rise 4.3 percent, with Ambrian repeating its 'buy' recommendation following the MRP's operations update.
Ambrian says strong production from Orion and ELV continues to provide valuable cashflow for MRP. It estimates the company is generating just under $1 million per month in gross revenue, in a benign, low political risk region.
The broker adds with a new, active phase of development drilling about to commence in first-quarter 2009, there are several short term catalysts that have the potential to add additional production, cashflow and shareholder value.
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