UK WINNERS & LOSERS: Next Jumps, Pearson Slumps After Contrasting Statements

LONDON (Alliance News) - The following stocks are the leading risers and fallers on the main London indices Wednesday morning.

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FTSE 100 - Winners

Next jumps 4.5% after it raised its full-year trading expectations. The company now expects to see sales growth from both its stores and online business of between 2% and 3.75% in the year to January 2014, up from a previous guidance of 1.5% to 3.5%. The retailer also increases its forecasts for pretax profit, expecting it to be between GBP650 million and GBP680 million, up from between GBP635 million and GBP675 million. Next expects to see earnings-per-share growth of between 15% and 21%, boosted by a share buyback of at least GBP300 million.

Barclays climbs 3.1% after the bank reported profits ahead of expectations. The bank posted a GBP1.17 billion pretax profit in the third quarter, a substantial increase on the GBP91 million for the corresponding quarter in 2012, taking its pretax profit for the nine months to September 30 to GBP2.85 billion, up from GBP962 million for the first nine months of the year in 2012. However, Barclays' adjusted pretax profit declined to just GBP1.39 billion in the third quarter, down 26% from a year ago, but 10% ahead of consensus expectations of GBP1.25 billion, says Shore Capital analyst Gary Greenwood. Barclays announced no change to its PPI provisions and surprised to the upside on adjusted pretax profits.

Marks & Spencer, up 2.2%, is gaining on the back of new data from consumer research group Kantar that shows a slowing in the decline of the UK retailer's clothing market share. The retailer's share of the womenswear market fell by 0.2% in the 24 weeks to the end of September, compared with a 0.5% decline in the precious 24 weeks, reports the Financial Times. The market is feeling "understandable relief from this market share data," says Shore Capital analyst Clive Black. Ahead of interim results, due on November 5, Black says he will be "please and relieved" if he can keep its full-year expectations intact and reiterates Shore Capital Buy rating on the stock.

Petrofac is up 2.1% after it said it will lead a partnership with Italy's Bonatti in a contract worth more than USD650 million to extend the life of Sonatrach's Alrar gas field in south east Algeria. It said the deal involves engineering, procurement, construction, and commissioning new separation and booster compression facilities at the field, which has been operation since 1987. Goldman Sachs has upgraded the company to Buy from Neutral, raising its target price to 1,577.00 pence from 1,512.00p.

BP is up 1.6% following a number of upgrades. Deutsche Bank raised the oil and gas company's target price to 520.00p from 500.00p, maintaining a Buy recommendation, saying that, "better than expected third quarter results were encouraging." Deutsche is especially encouraged by the 5.6% increase in dividend and further de-capitalisation. "Equally encouraging was the news that post the positive Appeals Court ruling, the US District Court has issued a preliminary injunction requiring the claims adjudicator to suspend business and economic claims other than those supported by sufficiently matched accurals-based accounting," Deutsche says. JPMorgan has raised its price target to 540.00p from 515.00p, maintaining an Overweight recommendation, while Société Générale has upgraded the company to Buy from Hold, raising its target price to 530.00p from 490.00p.

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FTSE 100 - Losers

Pearson falls 3.8% after it warned that its full-year operating profit before restructuring charges would be lower than in 2012, due to weak market conditions for college textbooks in North America and the impact of the Penguin Random House merger. Jefferies maintains its Hold recommendation, but "retains some lingering concerns with regard to profitability in the new digitally focused world," says David Reynolds, analyst at the investment bank. Figures from North America are a little disappointing, says Gareth Davies, analyst at Numis. While lower-margin US school sales remain resilient, higher-margin college sales are having a tougher time, he adds. Davies believes that, "lower freshman enrolment and bookstore purchasing have produced a weak trading environment for college-textbook publishing." Despite this, Numis, buoyed by the news that Pearson has reiterated its full-year guidance for adjusted earnings per share, increases its price target to 1,297.00 pence from 1,225.00p.

Standard Life is down 3.5% after its latest interim management statement missed expectations, according to Eamonn Flanagan, analyst at Shore Capital. The company reported a weaker nine-month 2013 performance than market consensus had expected, with total funds under management weaker than consensus, despite saying that its net inflows more than doubled in the first nine months of the year, as the Edinburgh-based insurance group added 195,000 new customers to its UK long-term savings business. Nine-month third-party funds at Standard Life investments missed consensus by approximately 2%.

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FTSE 250 - Winners

African Barrick Gold is up 9.6% after it said it is on track to deliver on its production targets. Gold production was up 11% at 164,719 ounces and copper production up 11% to 2.8 million pounds. The company said it now expects to exceed the upper-end of its gold production guidance range of 600,000 ounces for 2013. The company also said that due to a significant cost-reduction programme, the company's cost of sales fell 23% to USD158.7 million from USD205.2 million, and it said it remains on target to achieve its planned 30%, or USD100 million, in cost reductions by the end of 2013.

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FTSE 250 - Losers

Rank Group falls 1.4%. Rank said it will appeal to the UK Supreme Court after the Court of Appeal overturned a ruling that prompted the UK tax man to pay the company GBP30.8 million in disputed VAT in 2010. HM Revenue and Customs paid Rank the money for what the company claimed were VAT overpayments on certain types of amusement machines between 2002 and 2005 after the European Court of Justice ruled that taxing similar games differently broke fiscal rules. The Court of Appeal has now overturned that decision, meaning Rank may have to pay the money back.

NMC Health is down 3.6% after it was downgraded to Hold from Buy by Deutsche Bank. The bank retained its price target of 355.00p, saying the 78% year-to-date rally has brought the company's valuation in-line with peers.

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AIM - Winners

Paragon Resource climbs 110% after completing a deal to take a 40% stake in African agricultural business Greenstar Resources. The company will pay GBP103,377 in cash and shares for the stake, while one of Greenstar's owners, Andrew Beveridge, will become its new chief executive.

Copper Development Corporation jumps 54% after it announced a tender offer to buy back and cancel some or all of its issued shares. The company set out a circular stating that it will buy back up to its entire issued share capital of 230.4 million shares at a proposed price of 3.79 pence per share, subject to any adjustments.

Servoca is up 35% after it said its results for the financial year just ended will be significantly ahead of market expectations and it expects further growth in the current year. It said it had performed well and better than last year during September, a crucial month for its education recruitment business. The performance of the education business, combined with overall trading during the second half of the last fiscal year, give it confidence for the current year, it added.

Thor Mining is up 13% after it said drill programme results show that the gold potential at its Spring Hill project south of Darwin in Australia is better than previously thought. It said 11 drill holes of the 19 hole program intersected mineralisation within 50 metres of the surface at grades consistent with what the company has come to expect from Spring Hill, suggesting that the planned near-term oxide mining inventory, announced in June 2013, may be extended. Thor Mining holds a 51% interest in Spring Hill and is exercising options with Western Desert Resources Ltd to grow the stake to 80%. It hopes to commence mining at the site within 12 months.

Albemarle & Bond Holdings climbs 12% after the pawnbroker said it had reached a deal with its lenders to defer a test of its covenants until February 3, giving it more time to try and turn around the business and resolve its tight financing situation. The company has run into financial difficulties after gold prices fell sharply earlier this year. It has been in talks with its lenders since the end of September about extending the testing date for its covenants after discussions with its largest shareholder about an equity fundraising failed, meaning it will potentially breach the covenants. It had previously received an extension of the test date from the end of September to the end of October.

Hambledon Mining is up 11% after it achieved strong production figures in its third quarter, following the restart of its flagship metals mine in Kazakhstan. The company, with operations at its 100%-owned Sekisovskoye mine, said its gold production increased 56% to 9,161 ounces for the three months ended September 30, compared to the previous year. Hambledon completed repairs at a tailings dam at the Sekisovskoye mine earlier this year, and the mine became fully operational again in mid-June. As a result, the company underground mining operations continued to ramp up, with 1,985 oz of gold produced from underground mining during the quarter at an average grade of 4.03 grams per tonne.

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AIM - Losers

Beacon Hill Resources is down 14% after it said it chose to reduce production in its third quarter as it focused on upgrading its wash plant during a period of low commodity prices. The company said its saleable coal production fell 32% to 17,859 tonnes for the three months ended September 30 from 26,370 tonnes the previous year. The company said it chose to lower production at its Minas Moatize Coking Coal project due to record low coking coal prices and focused on its planned Phase 2B and phase 2C wash plant upgrade in order to achieve higher profitability from its ore. Beacon Hill said that funding discussions are progressing with a senior debt provider to finance the capital expenditure related to the Phase 2B and Phase 2C expansion.

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By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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