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WINNERS & LOSERS SUMMARY: WPP Hit By Report Of US Justice Probe Of Ads

7th Dec 2016 10:31

LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Wednesday.
Rio Tinto, up 4.3%. The Anglo-Australian metals and mining company was upgraded by Credit Suisse to Outperform from Neutral.
WPP, down 2.1%. The advertising giant's shares were lower amid reports that the US Justice Department is investigating whether advertising agencies have been rigging bidding processes for commercial contracts in favour of their in-house production units over independent companies, the Wall Street Journal reported on Tuesday citing people familiar with the matter. The Justice Department is investigating whether ad agencies are manipulating the bidding process, urging independent companies to inflate their prices so that contracts could be awarded to the agencies' own production and post-production outfits, the newspaper's sources said. The newspaper said it isn't clear which agencies are being investigated, but it noted that large agencies such as WPP and Publicis Groupe have in-house production and post-production divisions.

Pearson, down 1.5%. Liberum sees a negative read-across for education publisher from US book sellers Barnes & Noble Education, which on Tuesday lowered its full-year revenue guidance. Barnes & Noble is one of the largest US college textbook sellers, reported a 3.3% year-on-year decline in textbook sales. Liberum analyst Ian Whittaker noted that textbook rentals make up around 25% of Barnes & Noble textbook sales, but given the lower price it likely makes up a larger percentage in terms of volume. "Barnes & Noble stated that 'textbook rentals continue to be students' first choice'. The problem for the publishers is that book rentals means lower book sales in total – the same book can be rented five or six times but only requires one purchase by the bookseller, which helps with the latter's inventory management and, crucially, their margins," Whittaker said.

Unilever, down 1.1%. The consumer goods giant was downgraded to Neutral from Overweight by JPMorgan.
Stagecoach Group, up 3.5%. The transport operator reported a dip in pretax profit for the first half of its financial year but hiked its dividend as it said its expectations for the full year are broadly unchanged. The company said it made a pretax profit of GBP89.5 million in the six months to October 29, down slightly from GBP90.8 million a year before. Revenue edged up to GBP2.00 billion from GBP1.97 billion. Stagecoach declared an interim dividend of 3.80 pence per share, up 8.6% on 3.50p a year prior, reflecting the company's confidence in the long-term prospects for public transport markets. "We remain confident that we can continue to deliver long-term value to our customers and shareholders. The prospects for growth in public transport in the UK and North America remain good, and we are continuing to invest to ensure that our businesses are a central part of that growth," said Chief Executive Martin Griffiths.

CMC Markets, up 2.6% and IG Group Holdings, up 1.7%. The online spread betting firms and contracts-for-difference providers were staging a small rebound after being hammered on Tuesday by new rules proposed by UK regulator the Financial Conduct Authority. CMC and IG, both closed down 38% on Tuesday.
Carillion, down 5.0%. The construction and support services company said the pace of new order intake has declined in the second half, citing changes within UK government departments following the Brexit vote. The company said it is performing in line with expectations and expects to report strong revenue growth for 2016. This growth should offset a slightly lower operating margin, Carillion said, noting its full-year operating profit is expected to rise year-on-year. Carillion also said its Canadian subsidiary, Rokstad, has been selected by power and gas utility Manitoba Hydro as the preferred provider for the next phase of its Bipole lll high-voltage transmission line project in Manitoba. The project has an estimated revenue value of GBP120.0 million. Fellow construction company Galliford Try was also down 4.2%.

Paypoint, down 4.1%. The payments processing company was cut to Underweight From Equal-Weight by Barclays.
Mineral & Financial Investment, up 39%. The natural resource investor said a re-interpretation of four historic drill holes at Lagoa Salgada has revealed long intersections of copper rich polymetallic mineralisation and points to a new geological structure. The project, located in south central Portugal, is owned and operated by TH Crestgate GmbH, in which Mineral & Financial has a 49% stake. Mineral & Financial said a re-logging and re-assaying at the site has resulted in identifying a new and different type of mineralisation in addition to the previously identified lead-zinc rich volcanogenic massive sulphide (VMS) system. The earlier assays appear to have "solely focused on intervals bearing visible mineralisation". The re-testing of the holes also revealed 93 metres of mineralisation containing 2.85% copper equivalent.

LGO Energy, up 20%. The oil and gas explorer said it has agreed to pay off its existing bank debt and put in place a new funding facility, in order to get out of its current default position. LGO said it has agreed new USD8.6 million convertible security funding agreement with Lind Partners. Of that, USD1.8 million will initially be used to settle its remaining debt to BNP Paribas, which will take it out of its covenant default position. That default, which occurred in October 2015, has left LGO "unable to deploy significant capital to oil-field operations in Trinidad throughout 2016" and the company said it will now be able to operate freely.
Tricorn Group, down 14%. The tube manipulation company said its pretax loss for the first half of its financial year widened due to lower revenue and restructuring costs in China. Tricorn said it made a pretax loss of GBP249,000 in the half-year to September 30, compared to a GBP47,000 loss a year prior. Revenue declined to GBP8.9 million year-on-year, from GBP10.1 million, though sales rose 13% against the GBP7.9 million made in the six months to the end of March, the second half of its previous financial year. Adjusted pretax profit, stated before the costs booked for consolidating Tricorn's operations in China, slipped to GBP4,000 from GBP38,000 a year before.
By Arvind Bhunjun; [email protected]; @ArvindBhunjun

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