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Standard Life biggest loser as FTSE 100 cools off
by Chris Marshall on Oct 30, 2013 at 16:25
‘Against the backdrop of weak apparel markets over early autumn, this is another strong performance which competitors may struggle to match,’ commented John Stevenson of Peel Hunt.
Barclays jumped 3.6% higher, with its third-quarter financial results update garnering a better market reaction than Lloyds or Standard Chartered managed on Tuesday. Nine-month pre-tax profits rose to £2.85 billion from £962 million last year, with third quarter profits of £1.486 billion (down from £1.9 billion a year ago) just beating analyst forecasts.
The bank did however say it was ‘cautious’ about the outlook, while it is under scrutiny from regulators in a probe of possible currency trading by banks.
Analysts agreed that the bank was making steps forward; Jefferies’ Joseph Dickerson summed up the results as ‘good enough’ and reiterated his ‘buy’ call.
Pearson (PSON.L) fell 3.7% to £13.14 after the education and publishing group told investors that its full year operating profit this year would be lower than in 2012, partly a result of weaker demand for college textbooks in North America.
‘We are warming to the 2-3 year story, but accept near term US government (sequester/shutdown) and recent $ weakness (60% of sales US) are a headwind,’ noted Investec analyst Steve Liechti who recommends clients ‘add’ the shares.
Standard Life was also in the losers’ column, down 3.1% to 357p, after the insurer and asset manager reported strong sales that nonetheless fell slightly short of high City hopes. For the nine months to 30 September, the company managed life and pension sales of £17.3 billion, up 20%. Group assets rose by 9% to £237.6 billion.
Panmure Gordon’s Barrie Cornes is among a City minority who say the shares are worth buying, rather than just holding onto. ‘In our view Standard Life represents an attractive defensive play within the sector, is starting to benefit from RDR and Auto enrolment and yet following recent share price weakness is trading at a very attractive dividend yield of 4.3%.’
It’s all in the price, said Nomura analyst Ben Bathurst: ‘With the stock trading at a slight discount to the sector in embedded value terms, but considerably lower returns, we believe the growth potential is more than fully reflected in the current price, and retain our Reduce recommendation.’
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