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Shares in Raymarine sank today after a bleak broker warning that investors may be left almost empty-handed even if a sale of the group goes ahead.
The debt-laden group, which makes radars and radios for boats, tumbled by over a fifth as it warned that it is unable to meet some of its debt covenants and posted a 35% drop in first-half sales.
Raymarine is in talks with potential bidders, including US navigation device company Garmin, which has said that it could stump up cash for the group. But Seymour Pierce reckons that this is no guarantee that shareholders will receive anything more than a nominal sum.
The broker advises dumping the shares, which dropped 4¼p, or nearly a quarter, to 13¼p. Analysts also warn that there is likely to be no pick-up in the sector until late next year.
Shares in London were on track to end the month more than 6% higher this afternoon. The good mood in London was fuelled by GDP figures which showed that Britain's economy shrank by less than was first thought in the second quarter, sparking talk that the UK could soon follow its continental counterparts out of recession.
The FTSE 100 index rose 52.59 points to 4921.94, to a new 10-month high, thanks to a strong showing from heavyweight banks and miners.
It came as Citigroup said that a recovery is still nowhere near being priced in to shares.
The bigshot broker said today that UK and European equities are still trading around 20% below their average ratio of price to assets. They reckon that 2010 will be the bounceback year.
Market strategist Jonathan Stubbs says that the first-quarter earnings season was the worst the bank has ever seen, with a record number of companies missing expectations. But the second quarter has seen a sharp pick-up in results, with the majority of companies now beating analysts' estimates thanks to aggressive cost-cutting programmes.
Banking stocks soared as investors' appetite for risk returned. Lloyds Banking Group surged despite the Queen's stockbroker Cazenove warning that a sale of all its life and investment businesses, including Scottish Widows, looks unlikely as analysts expect the sale would generate a loss in the current market conditions. They reckon Clerical Medical will go under the hammer, however.
Shares in the black horse bank rose 4.7p to 109.4p, taking their gains over the past fortnight to almost 15%.
Royal Bank of Scotland, whose shares have gained a quarter in the past two weeks, added 1.4p to 57p.
Miners were in demand thanks to metal prices rising on growing recovery hopes. Kazakhmys rose sharply for a second day as brokers gave the thumbs-up to its results. The Kazakh-focused group soared 58p to 995p, as Bank of America Merrill Lynch advised clients to snap up the shares and hiked up their target price from 1250p to 1300p.
Fellow miner Xstrata also won a fan club, shooting up 43½p to 835½p as Morgan Stanley advises clients to buy, with a 1197p price target.
Bankrupt German retail giant Arcandor's majority stake in holidays group Thomas Cook could be about to hit the stock market. German newspaper Handelsblatt claims that the attempted sale of the stake to a single investor failed, and the shares will now probably be offloaded “in the coming days” at up to a 7% discount to their current share price. The package tours organiser added 3.1p to 227.7p.
Melrose proved that there is still life in British industry, as the FTSE 250 turnaround specialist more than doubled pre-tax profits in the first half of the year to £38.8 million. Investors' eyes lit up with pound signs, as its shares surged 9.9p to 158.9p and the interim dividend was raised by 5% to 2.9p.
Melrose, which buys underperforming manufacturing businesses, is looking for its next acquisition, having snapped up hardware and specialist lifting equipment FKI last year. Chief executive Christopher Miller reckons that we are in a buyers' market, and is keen to go shopping.
UBS put a little bit of fizz into soft drinks maker Britvic, sending its shares up 0.2p to 340.4p. The heavyweight broker reckons that the group behind Tango and Robinsons is still looking cheap and has jacked up its price target from 330p to 400p on the back of stronger sales expectations.
Among small caps, gas producer Northern Petroleum jumped 7p to 138.7p on good news from one of its fields. The Aim-listed group said that it has upped production at its Grolloo field in the Netherlands.
