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.
Shares in GKN shed 3.6 percent as Goldman Sachs cuts its rating to 'neutral' from 'buy' in a cautious review of the European automotive sector.
Goldman Sachs says while GKN shares currently look inexpensive on mid-cycle multiples, based on its below consensus forecasts, it believes the stock offers only a balanced risk/reward scenairo.
The broker highlights the significant uncertainty facing the components manufacturer as a result of signs of a softening civil aerospace cycle, risks to U.S. defence spending going forward, potentially widening pension liability, and likely ongoing concerns over GKN's exposure to automakers in North America.
Goldman Sachs says it has reduced its 12-month risk/reward price target for GKN to 116 pence from 200.
Shares in British regional newspaper group Johnston Press fall 5.3 percent as Citigroup and Investec Securities repeat their 'sell' ratings on the stock and Numis cuts to 'reduce' from 'hold', after the company says ad revenues have been hit by a slump in property advertising.
Citigroup says second-half trends now make its 2008 and 2009 ad forecasts look optimistic, with rcruitment and dsplay, which up until now had shown some resilience, now its biggest concerns.
Investec says the figures were at the low end of expectations and it has therefore placed its forecasts and target price under review.
Numis says it is reducing its 2009 estimates materially to reflect the deteriorating outlook, while highlighting that the group's facilities expire in September 2010, adding 'the worst case scenario would be a covenant breach and debt for equity swap, wiping out what remains of the equity value.'
Shares in Amec add 2.2 percent after a confident trading update, which prompts Seymour Pierce to raise its rating to 'buy' from 'hold' to reflect recent share price falls.
Seymour Pierce points out that Amec shares have underperformed the market by 20 percent in the three months leading up to the third quarter trading update, mainly due to falling oil and commodity price.
The broker says that while it does not deny that rising oil and commodity prices were in a large part responsible for the converse rise in the shares earlier this year, it believes this fall has been overdone.
Seymour Pierce says this is supported by Amec's update, which shows trading in the third quarter continues to be strong, with the company awarded a further 700 million pounds of contracts in the period.
The broker says its has maintained its EPS estimate for Amec for full year 2008 at 39.7 pence, but thinks its full year 2009 estimate of 44.4 pence looks too low and expects to upgrade.
Shares in Dimension Data rise 5.9 percent after South African IT firm announces preliminary results. Investec Securities calls the results 'robust' and repeats its 'buy' recommendation and 51 pence target price.
Investec analyst Gareth Evans says: 'Full-year 2008 earnings, with revenue, EBITA and cash generation all ahead of our previous full-year 2009 estimates. This very significant achievement should not be overlooked.'
However, the broker has reduced full-year 2009 revenue forecasts by 7 percent, pretax profit by 5 percent and EPS to 3.8 pence from 4.0 pence citing macro economic concerns.
But Altium says that management has the experience and tenacity to guide the company through these troubled waters and maintains that DDT shares remain highly attractive.
Mining shares trip on further announcements of production cutbacks that will dent profits, and persistent worries over a deep economic downturn. The DJStoxx basic resources index slumps 2.7 percent, making the sector the weakest performer in Europe, while the UK mining index gives up 2.2 percent versus a slightly firmer FTSE 100.
Kazakh group Eurasian Natural Resources Corp is the biggest loser in the FTSE 100, falling 8.2 percent, after it cut ferrochrome and iron ore output and said full-year profits would be at the lower end of expectations.
The world's third biggest platinum producer Lonmin off 5.0 percent after workers strike at its Limpopo mine in South Africa, Kazakhk copper producer Kazakhmys loses 6.5 percent and Anglo American drops 3.9 percent.
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