WINNERS & LOSERS SUMMARY: Next Update Drags On Retail Names

LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Tuesday.
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FTSE 100 - WINNERS
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Royal Mail, up 2.2%. Cantor Fitzgerald upgraded the postal operator to Buy from Hold, arguing that markets have underestimated the strength and value of the group's brand and network and have overstated concerns about its wage negotiations, future pension costs and regulatory risks. Royal Mail currently trades at 10.5 times 2016 earnings estimates, compared to 15.1 times for the wider mail and logistics sector. Though the business faces challenges in the next couple of years, it looks better prepared to meet these than before, analyst Robin Byde said, and the benefits of its established brand and networks are not fully appreciated.

Tesco, up 1.6%. Deutsche Bank upgraded the supermarket to Buy from Hold following a recent fall in its share price and on confidence it will be able to outpace its rivals on margin progression despite its lacklustre like-for-like sales performance. Despite its disappointing top-line, Deutsche said Tesco has the strongest valuation support among the UK supermarkets.
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FTSE 100 - LOSERS
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Next, down 5.2%. The fashion and homeware retailer reported a rise in sales in the year to January 2, although growth was below the bottom end of its prior guidance, and said it expects full-year profit to remain within its previously guided range. Next also declared another special dividend. The retailer said total brand sales rose 3.7% in the year to January 2, with Next Retail up 2.1% and Next Directory up 6.1%. This was below its previously guided range of between 4% and 6% growth for total sales. In the 60 days from October 26 to December 24, total brand sales grew 0.4%, as a 2% increase in Next Directory offset a 0.5% decline in Next Retail. Next said its performance in the fourth quarter was "disappointing" due to unusually warm weather in November and December, while Next Directory was hit by poor stock availability from October onwards. The weak update from Next appeared to be dragging on other retailing stocks, amid concerns that Next's report signalled a poor Christmas for UK retailers generally, with Marks & Spencer Group down 0.9% and mid-cap department store operator Debenhams falling 2.2%.

Aberdeen Asset Management, down 5.8%. Barclays cut the emerging markets-focused asset manager to Underweight from Equal Weight, claiming concerns about the company go beyond a simple macroeconomic call on weak investor sentiment toward emerging markets. Barclays said it holds concerns about equity performance, the challenging outlook for investment flows, and "poor" dividend cover. Barclays said other areas exposed to potential outflows include Aberdeen's underperforming global equities desk, high yield in fixed income, the life book of the Scottish Widows Investment Partnership business acquired from Lloyds Banking Group in April 2014, and the multi-asset area of its Solutions arm.
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FTSE 250 - WINNERS
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Spire Healthcare Group, up 2.6%. JPMorgan Cazenove upgraded its price target on the private hospitals operator to 395 pence from 310p, keeping a Neutral rating on the stock. Spire shares were trading at 311.90p.
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MAIN MARKET AND AIM - WINNERS
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MySQUAR, up 11%. The Myanmar-based social media and entertainment platform operator said its total user base was in excess of 2.0 million at the end of 2015. The company said the rise brought its user base to two-and-a-half times the level it had been at the end of May 2015. "As 2015 developed it became clear that we were meeting our targets well ahead of expectations, and this latest update on user acquisition robustly maintains that trend," said Chief Executive Eric Schaer.

Bango, up 9.6%. The mobile payments company said it has deepened its relationship with Microsoft so that customers running the technology giant's latest operating system, Windows 10, on a PC or tablet can buy digital content by charging the costs to their mobile phone bill. Bango said the availability with specific operators will be disclosed as the carrier-billed payments are launched starting in January.
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MAIN MARKET AND AIM - LOSERS
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Mosman Oil & Gas, down 15%. The oil and gas company said it has issued a review notice to Origin Energy over the acquisition of the South Taranaki licence in New Zealand after the Brent oil price benchmark dropped below USD40 per barrel. Brent was trading at USD36.84 a barrel Tuesday morning. Mosman is acquiring a 70% stake in the licence from Origin but has now issued the notice in order to enter good faith negotiations of amendments to the agreement given the fall in world oil prices. If no agreement is reached within 30 days on an amended deal, either party has the option to terminate the agreement, Mosman said.

Motive Television, down 9.2%. The television technology company said it has agreed a deal with the largest investor in its convertible loan notes, in a move designed to get the company's balance sheet in order. The deal means Motive Television will buy convertible loan notes with a face value of GBP1.4 million from the investor for GBP100,000, plus a five-year warrant that allows the holder to acquire 5.0% of the company. Completion of the acquisition is expected no later than January 15.
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By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance

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