MARKET REPORT: Phoenix's activist shareholders waiting for cash-rich private equity player to put group out of its misery
Heavyweight activist shareholders of Phoenix IT, which include Martin Hughes’ Toscafund sitting on 19 per cent, are patiently waiting for a cash-rich private equity player to put the underperforming group, which stores data for other companies, out of its misery.
In the meantime, they were happy to see the shares rally from a 52-week low to close 9.38p or 8 per cent higher at 119.75p following a third-quarter trading statement.
Industry guru George O’Connor, at Panmure Gordon, described the statement as anodyne. It did not comment on how the business is performing relative to full-year expectations, there was no news on the pending chief executive appointment to replace David Courtley, who fell on his sword in October after another profits warning, and there was also no commentary on its poorly Partner Services division.
Although the market did hear that its Business Continuity division is ‘having a good quarter for contract renewals’. Yet O’Connor remarked that given the state of the London recovery market – London institutions typically have disaster recovery facilities in Docklands, which is under pressure as the Thames barrier is seeing more use – Phoenix IT should be screaming from the rooftops about its recovery suites outside London.
Phoenix has the widest business continuity network of any UK-based provider, with 18 secure, state-of-the art centres equipped to the highest standards and open for business 24/7. Customers include Experian, Marstons, RSA and Cape.
Miners helped the Footsie keep its head above water, just. It closed 4.2 points better at 6,663.62, while the FTSE 250 climbed 81.23 points to 16,110.62. Wall Street retrieved a 30 point fall to trade that much higher in early dealings in New York.
As the price of gold bullion, already up 9 per cent this year, traded above $1,300 an ounce for the first time since last November, Fresnillo sparkled at 971.5p, up 49p, and Randgold Resources advanced 87p to 4774p. In demand earlier in the week after the central bank of Kazakhstan devalued the tenge by 19 per cent, Kazakhmys rose a further 27.6p to 233.9p. Analysts say it will cut costs by 20 per cent.
Broker Killik advised clients to sell tobacco giants Imps, 51p down at 2300p, and Bats, 5p off at 3047p. It cited a number of reasons, including a general shift to healthier lifestyles, the high cost of smoking, the prospect of increased price competition as producers take to market share and the uncertainty created by the emergence of e-cigarettes.
Mobile phone giant Vodafone lost 3.05p to 218.4p following confirmation that Vodafone India has acquired Spectrum for £1.9bn. Vodafone’s army of shareholders will soon have a decision to make.
Holders of stock on February 24 will be eligible for their proportion of the company’s ‘return of value’ of £14.3bn in cash and £33bn in shares in Verizon Communications, the group acquiring Voda’s Verizon Wireless stake.
Holders of 1,000 Voda shares should receive £300 in cash and £750 in VZ stock, although the exact amounts will not be fixed until the deal goes through on February 21.
Beleaguered pawnbroker Albemarle & Bond succumbed to renewed nervous selling and fell 3 per cent further to 7.02p amid growing fears that the business will go into administration at the end of March, or even before. Attempts to find a buyer have so far failed.
They are a girl’s best friend. Petra Diamonds, 1.9p brighter at 149.9p, chose the perfect day to announce the $25.6m sale of the 29.6 carat blue diamond it recovered from the Cullinan mine in South Africa last month.
The price per carat – $862,780 – is likely to be a world record price per carat for a rough diamond. Westhouse Securities’ target price is 170p. A Berenberg upgrade and raised target price to £17.40p from £13.70p helped oil equipment services group Petrofac gush 52p to 1317p. The broker expects it to generate net income of $820m in 2015 against consensus forecasts of $808m.
Kenmare Resources improved 0.95p to 16.9p after announcing an anticipated debt restructure.
Buyers continued to fill their boots with TyraTech Inc, a further 4.75p or 57 per cent up at a record 13p. The blue touch paper was lit after the company last month revealed that Walmart, the world’s second-largest public corporation, is to stock its treatment for headlice, Vamousse. Bulls believe other lucrative orders from major retailers will follow.
Nosey buying on talk of an imminent announcement lifted oil and gas developer Enegi 1p to 9.25p.
Photo-booth and laundry machines company Photo-Me International improved 1p to 144.75p after returning £7.5m to loyal shareholders in the shape of a 2p a share special dividend.
Down 12 per cent from the December high, Dixons Retail firmed 0.02p to 47.03p. Cantor Fitzgerald has a target price of 60p. Analyst Freddie George said it is now up against the anniversary of Comet going into administration and a particularly strong Easter last year.
But the stock looks significantly undervalued relative to the proposed valuation of Appliances Online.
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