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Pearson’s 2014 warning keeps FTSE in check

Pearson’s 2014 warning keeps FTSE in check

Pearson, the publisher and Financial Times owner, shot lower on Friday morning, adding to a string of blue chips that have this week disappointed investors and weighed on the FTSE.

Pearson (PSON.L) told shareholders that it expected earnings to fall next year, alongside the news of a 21% decline in adjusted operating profit in 2013 to £736 million.

Its 8.1% share price decline to 988p on Friday means the stock is down 20% so far this year, as the business struggles amid restructuring costs and weak demand for higher education in the US market.

Most analysts say the stock is a ‘hold’. Ian Whittaker of Liberum said that while there were some ‘nasty surprises’ in the detail ‘the real shock for the market’ was the guidance about earnings declines.

‘We reiterate as our Key Sell in media – structural pressures are accelerating, particularly in North American higher education, which is core area of concern,’ Whittaker said.

Aggreko (AGGK.L), the supplier of temporary power, was also in the losers’ column – down 3.1% at £15.78 – after the group announced that chief executive Rupert Soames had resigned.

Aggreko’s loss was Serco (SRP.L)’s gain as the outsourcing group revealed that it had poached Soames. Serco rose 10% to 451p.

‘Mr Soames has been an inspirational leader for Aggreko in our view and he will be missed,’ said Caroline de La Soujeole, an analyst at Cantor, but he is ‘exactly the leader that Serco needs to help restore the group’s fortunes.’

The wider FTSE 100 fell 0.1% to 6,799, amid ongoing concerns about rising political tensions over Ukraine. After a mixed week the index is heading for a slight loss, but remains up some 0.7% so far this year

Shares were yesterday helped by comments from new US Federal Reserve chief Janet Yellen that although the Fed will likely to continue to reduce the scale of its stimulus programme, this ‘tapering’ strategy could be altered were there a ‘significant’ change in the economic outlook. 

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