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Shares in British Airways went into a spin today as UBS warned the airline won't make a profit until 2012.
The Swiss banking giant said the trend for passenger numbers, capacity and yields is still one of decline. It reckons these will hit the bottom for BA in 2010 before picking up in 2011, but it will take another year for the company to drag itself back into the black.
The flag carrier fell 6½p to 223¼p as a note from Citigroup, which downgraded BA from buy to hold, also weighed on the shares.
Citi notes that the stock has been among the best performers in the European aviation industry over the past three months, leaving them looking expensive and vulnerable to any disappointments.
But it has upped its target price from 240p to 250p to reflect an increase in the value of its 13% stake in Spanish carrier Iberia.
Shares in London were on the back foot as dire US home sales figures sparked a sell-off of property stocks.
The FTSE slid 12.92 points to 5126.45 as Land Securities fell 32½p to 642½p, British Land dropped 21p to 469p and Hammerson lost 18p to 399½p. Meanwhile, the FTSE 250 — a better barometer of British business — sank 70.68 points to 9146.33 as the housebuilders came under the kosh.
Over on Wall Street, shares were almost flat, with the Dow Jones rising 4.24 points to 9752.79.
Software group Autonomy raced up 32p to 1595p, amid ongoing rumours that Microsoft might be circling. The mutter from the gutter was of a possible bid at a staggering £28 a share. The shares were also helped by Merrill Lynch hiking its target price from 1660p to 1900p.
It wasn't the only company that was the subject of renewed takeover talk. The rumour which will not die, that BlackRock is eyeing up listed hedge fund Man Group, was again doing the rounds.
BlackRock only won EU approval for its takeover of Barclays Global Investors yesterday, but traders say it remains hungry for acquisitions. Man's shares added 8p to 311¾p.
With many analysts believing the best may now be behind the markets, Credit Suisse told clients which shares they should short — bad news for BSkyB and Cable & Wireless (C&W).
It reckons times are getting tougher for Sky. With the UK pay-TV and broadband market becoming mature, it says Sky must change its strategy from market expansion to grabbing customers off rivals. The bank thinks Sky's broadband division will struggle to meet its target to break even by 2010.
Highly regarded media analyst Nick Bertolotti predicts that if Sky drops its HD subscription charge, this would threaten more than 10% of forecasts for earnings. He sets a 430p target price for Sky's shares, with a sell rating. But they shot up 10½p to 565p after Sky released independent findings criticising Ofcom's proposals for the pay-TV market.
Telecoms group C&W also found itself on Credit Suisse's list to short amid fears over sales growth at its Worldwide arm. The division, which provides telecoms services mostly to UK enterprise customers, is expected to struggle as corporate customers stop splashing out. C&W shares slipped ½p to 144p.
Shares in oil explorer BG Group have risen 12% since the start of the month, and today chief executive Frank Chapman reckoned it was time to take profits. Chapman has dumped 1.6 million shares in the company at 1113p a pop, sending them down 17p to 1088p.
Credit-crunch holidays and the brief summer sun have given sales at Halfords a boost. That's the verdict of Investec, which advised snapping up shares in the bicycles and car parts retailer.
The stockbroker reckons Brits who stayed at home this summer flocked to the chain to pick up their bicycles, trailers, tents and roof boxes before heading off to the countryside. Investec thinks Halfords will report an 18% jump in pre-tax profits in the first half next month, on the back of flat, like-for-like sales. Analysts have jacked up their target price for the shares from 400p to 435p. Today, they jumped 8.4p to 349p.
Soaring numbers of out-of-work Brits desperate for career advice mean business is booming at human resources firm Penna Consulting. Shares in the Aim-listed group put on 10p to 235p after chairman Stephen Rowlinson told investors at its annual shareholder meeting first-half profits will be significantly ahead of last year. Broker Collins Stewart says the shares are a buy, and sets a 280p price target.
Reader views (1)
Last week when Goldman Sachs posted this on their ' conviction' list I wrote to the ES site and suggested it was time to sell. The fall has been 11 per cent since then and there is more to come probably another 22 per cent. BA have maitained an arrogance for a long time and their move to mimic the budget airlines with no food in economy is too little too late and small minded. The bigger picture will soon unveil.
- Martin Clarke, london, 24/09/2009 17:36
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