United kingdom Daily news: MARKET REPORT: Reckitt Benckiser limps on after sell-down

MARKET REPORT: Reckitt Benckiser limps on after sell-down

By Geoff Foster

PUBLISHED: 16:24 EST, 28 June 2012 | UPDATED: 16:24 EST, 28 June 2012

Currently blitzing the US healthcare market with an advertising campaign for its Durex Performance Intense condom as it attempts to steal market share from major rival Trojan, shares of household products giant Reckitt Benckiser gave a limp performance in London following a Credit Suisse downgrade.

They were sold down to 3274p before closing 77p lower at Â£33 after the broker downgraded to neutral from outperform and slashed its 12 month target price to Â£35 from Â£38.

Highly rated analyst Charlie Mills reduced his 2012-2013 earnings per share forecast by 7 per cent.

MARKET REPORT: Reckitt Benckiser limps on after sell-down

Reckittâ€™s historical outperformance in the marketplace was driven by its â€˜almost unique abilityâ€™ to garner growth from the developed markets, and in particular Europe, but this has not been the case for the last two to three years. Mills does not see that changing any time soon.

Shrewd investors could have jumped ship in mid-May when the Reimann family, Reckittâ€™s largest shareholder, sold a 4.9 per cent stake, or 36million shares, at Â£33.50 apiece, which was a significant discount to the prevailing market price.

The reclusive Reimanns inherited their stake in Reckitt after their family company Benckiser merged with Reckitt Colman in 1999. They still retain a â€˜strategic holdingâ€™ of 10.5 per cent.

Drugs giant AstraZeneca jumped 29.5p to 2828.5p on a Liberum Capital buy recommendation and assumption the group is primed for a turnaround. The broker says a chief executive to replace David Brennan is likely to be announced by the end of the year and this will act as a catalyst given that one element of uncertainty is removed.

AZâ€™s rise was also accompanied by vague talk that it could soon get involved in an auction to buy Biomarine of the US, which trades around $38 in New York. The company researches and develops therapies for debilitating, fatal and chronic genetic disorders, and is rumoured to be up for grabs. The take-out price could be nearer $60 a share.

GlaxoSmithKline, 24p easier at 1446p, Sanofi and Biogen are all believed to be interested.

As dealers waited in vain for any bullish news to come out of the EU summit in Brussels, the volatile Footsie was dragged lower by a friendless heavyweight banks sector which succumbed to an avalanche of selling on fears that the Barclays LIBOR scandal will claim the scalp of chief executive Bob Diamond. The close was 30.86 points down at 5,493.06, while the FTSE 250 shed 63.69 points to 10,688 29. Barclays was sold down to 160.75p before closing a hefty 30.45p, or 15.53pc, lower at 165.6p after Prime Minister David Cameron said: â€˜The whole of Barclaysâ€™ management team have got some serious questions to answer.â€™

Cenkos analyst Sandy Chen rubbed salt in the sectorâ€™s gaping wounds by forecasting â€˜multi-year provisions that could run into billionsâ€™ for the sector.
Royal Bank of Scotland, which is 82pc owned by the UK taxpayer, fell 26.7p, or 11.45pc, to 206.4p, while HSBC shed 14.8p to 558.2p as dealers heard they too are to be investigated about some possible jiggery-pokery in the LIBOR market.

Lloyds Banking Group, over 40 per cent owned by the tax-payer, eased 1.22p to 29.94p. It has finally agreed to sell 632 branches to the Co-op and it is hoped that Heads of Terms can be agreed over the next month or so.

Kazakh miner Eurasian Natural Resources rallied from 382p on bid talk to close 3.9p better at 400.3p.

Reports of a pending upbeat circular lifted JD Sports Fashion 43.5p to 700p.

A Singer Capital Markets recommendation and target price of 160p helped Afren firm 2.3p to 98.4p. Solo Oil edged up 0.02p to 0.48p and Aminex 0.4p to 4.42p after they announced significant results from the flow testing of the Ntorya-1 well at the discovery in the Ruvuma Basin onshore in southern Tanzania.

Serial underperformer Pursuit Dynamics lost 0.88p, or 6.67 per cent, to 12.25p after yet another disappointing trading statement. It informed long-suffering shareholders that it has failed to convert recent opportunities in multiple lines of business into exclusive licences. Chief financial officer Richard Webster will be leaving the board at the end of September. The shares collapsed last month when, surprise surprise, the company failed to achieve an exclusive license agreement with Procter Gamble.

Photo booth-to-vending machine group Photo-Me International added 1.5p at 42p after posting higher annual profits and forecasting further progress in the year ahead.It has Â£52million cash in the bank.

- Singapore-based specialist Feng Shui consultant New Trend Lifestyle staged a promising debut on AIM. Placed at 8p, the shares touched 10.75p before closing at 9p. It is one of Asiaâ€™s leading consultancies and includes Citibank and Standard Chartered among its list of blue-chip clients. It recently established a base in China and its flotation proceeds will help fund further expansion into what is a highly lucrative market.