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FTSE slips lower as investors ditch Aggreko
Banks and miners make small losses, but Aggreko (AGGK.L) is the standout stock, dropping sharply after issuing a cautious outlook.
Shares in FTSE 100-listed Aggreko (AGGK.L) plunged this morning after the world's biggest temporary power firm provided a cautious outlook and warned investors of growing bad debts.
Aggreko, which has provided power generation and temperature control systems at events as large as the Olympic Games, the football World Cup and the US Superbowl, was the biggest faller on London’s blue chip index, losing nearly 7% to hit 2,146p.
Although the company reported underlying sales growth of 13% in the third quarter of the year, investors were fretting over the announcement of high costs for a project in Mozambique, alongside the increase in its bad debt provision.
‘Since our last trading update in early August… exchange rates have moved against us, and we have also increased our bad debt provisions; we expect that, between them, these two factors will impact our anticipated profits for the year by about 2.5%,’ the company warned.
Analysts kept the faith with the stock, suggesting any share price weakness after today’s trading statement could mean the shares are ripe to buy. ‘Given our belief in the longer-term structural growth case, we would especially utilise any weakness as a buying opportunity,’ wrote Justin Jordan of Jefferies in a note, with a 'buy' recommendation.
Caroline de La Soujeole of Seymour Pierce agreed: ‘We remain buyers. On our current numbers the shares are trading on a prospective P/E of 21.2x which we believe is not demanding for a business expected to deliver double digit earnings growth over the foreseeable future.
Andrew Nussey at Peel Hunt was less forgiving, warning that the shares could be 'vulnerable' in the near term, maintaining his 'hold' recommendation.
The broader FTSE 100, meanwhile, at 5,909, was marginally down after a week of gains; a mill pond in sharp contrast to the day exactly 25 years ago when share price falls were so steep that it became known as Black Monday.
Bad news from US tech stocks overnight – Google unveiled a weak third-quarter earnings report – led to small losses on Wall Street and on Asian markets.
In London this morning, investors were taking profits in miners – which have been at the forefront of much of the share price rises this week – with Rio Tinto (RIO.L) down 0.7% to 3,237p, Xstrata (XTA.L) 0.7% lower to 997p and Anglo American (AAL.L) trading down 0.4% at 1,892p.
Burberry (BRBY.L) was the biggest riser on the FTSE 100, up 1.1% to 1,193p after Investec upped its rating on the luxury fashion company from ‘hold’ to ‘buy’, with a new price target of 1,300p.
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Look up the shares
- Barclays PLC (BARC.L)
- Lloyds Banking Group PLC (LLOY.L)
- Aggreko PLC (AGGK.L)
- Rio Tinto PLC (RIO.L)
- Anglo American PLC (AAL.L)
- Burberry Group PLC (BRBY.L)
- Xstrata PLC (XTA.L)
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