Ahead of the US jobs data later, leading UK shares are struggling to hit another record high.
Two more days of closing highs would beat the eight-day record set in 1997, but so far the FTSE 100 is down 5.10 points at 7190.21. However the index is still on course for its fifth consecutive weekly rise.
Leading the risers is payments processor Worldpay, up 7.1p at 285.2p, as analysts at Exane BNP Paribas raised their recommendation from neutral to outperform. They said: We remain cautious on Worldpay’s eCom margins and capex but factor in faster sales growth. Also, we up EBITDA forecasts for Worldpay US: we believe the division now has the right assets to compete in the SMB [small to medium size business] space. In all, we revise our group EBITDA forecasts by 4% for 2017 and 7% for 2018.
Lloyds Banking Group is close behind, up 1.3p at 65.95p after analysts at Barclays lifted their target price and rating: UK economic prospects remain challenging and uncertain but less severe than we had previously anticipated. On revised economic assumptions, our detailed credit quality analysis suggests that provisions will peak below 35bp and we expect the net interest margin to rise helped by the interest rate environment and the planned MBNA credit card acquisition. Together these drive around 15% upgrades to our underlying earnings estimates in 2017 and 2018, suggesting that Lloyds can make a near 13% return on total equity over the next three years and return close to a quarter of its market cap to shareholders. We expect this to drive share price outperformance and upgrade Lloyds to overweight with a 75p price target (from equal weight, 55p).
Persimmon has put on another 22p to £19.62 after the housebuilder’s positive update this week.
With gold slipping from a one month high as the dollar strengthened ahead of the non-farm payrolls numbers, precious metal miners are among the biggest fallers in the leading index. Fresnillo has fallen 30p to £13.68 while Randgold Resources is down 125p at £65.80.
Outsourcing group Capita is 8p lower at 512p after UBS cut its price target from 575p to 540p. It said:Capita was the worst performer in Support Services in 2016 (-57%). Disposals, restructuring, and reinvestment are all required to return Capita to a path of long-term earnings growth but we do not think these New Year’s resolutions will be ticked off quickly. Around 10 times EV/EBITA, around 11 times PE (pro-forma for disposals) suggests the market is pricing in no long-term growth – but deflationary trends are only accelerating and we expect the UK environment to remain pressurised. We cut numbers a further 4-9% (with 2016 estimated margins falling to around 12%), lower our price target to 540p, and remain neutral.
Among the mid-caps, broking group TP Icap has jumped 33.5p to 466.9p after a positive trading statement. The group, formed when Tullett Prebon bought Icap’s voice broking business, said it has seen a surge in trading volumes in the final months of last year, boosted by Donald Trump’s victory in the US presidential election and speculation about higher interest rates. Peel Hunt analyst Stuart Duncan said:The strength of trading in the fourth quarter has surprised on the upside, with a benefit from both increased activity levels and a further foreign exchange tailwind. The net effect is a significant increase to December 2016 forecasts (+14%). Key for TP ICAP is delivering the benefits of the recently completed transaction. Our recommendation remains hold.
But consumer credit group International Personal Finance has dropped 9% to 160p after it said it would appeal against a ruling by the Polish tax authority relating to 2008 business. It said it would pay £20m assessed by the authority in order to make the appeal, and said it expected a similar decision related to 2009 which would give rise to a similar liability.