blinkx Shares Buoyed by US Election
The hard-fought US presidential election proved a boon for online video search group blinkx, which was the toast of the City after the company said political campaign spending in America helped boost sales.
As a result of a strong third quarter, the Aim-listed group, which was spun-out of Autonomy, told investors it was “ahead of targets” and expected full-year revenues of between $180m (£115m) and $185m. Traders were impressed and chased the shares up 17½ – or 25.7pc – to 85½p, its highest level since last February.
London and San Francisco-based blinkx bought Prime Visibility Media Group and Burst Media in 2011, and today said those purchases had also helped trading. “The acquisitions have significantly expanded the scale and scope of the blinkx engine and the integrations are being implemented extremely effectively,” chief executive Brian Mukherjee added.
The jump in the share price will no doubt have pleased blinkx non-executive director and former Autonomy chief executive Mike Lynch, who holds a stake of some 6pc in the company. Through its 2011 takeover of Autonomy, Hewlett-Packard has a 12.6pc shareholding. The Financial Reporting Council today disclosed it would investigate Autonomy’s published results in the run-up to the HP deal. Mr Lynch has denied allegations made by the US company of accounting improprieties at the Cambridge-based group.
The FTSE 100 put in a more muted performance and added 13.13 points to 6,277.06, while the mid-cap FTSE 250 dipped 1.62 points to 13,373.63. Investor worries over political instability in Italy and Spain saw London’s benchmark index record its first weekly decline of 2013 on Friday, and concerns about Europe once again dampened traders’ spirits today.
Barclays was on the rise ahead of the bank’s full-year results tomorrow, helped by reports the lender will unveil significant cost cuts. Shares in the bank advanced 2.9 to 301½p, and Standard Chartered put on 10p to £17.04, Royal Bank of Scotland gained 1.2 to 340.3p and HSBC closed 1.6 higher at 718.3p.
Insurers were in demand too, following a push from Bank of America Merrill Lynch. Admiral, up 10p at £12.38, and Resolution, 1.4 better off at 256.8p, provide “outstanding dividend yields” and are “relatively low volatility stocks”, analysts at the broker argued. Lancashire Holdings, 8½ higher at 840p, and Prudential, up 8½ at 939p, “offer best in class management teams”, while Old Mutual encapsulates “a neat balance of growth, restructuring and attractive valuation”, the BAML experts said. The latter advanced 1.3 to 193.3p.
Investors were also playing supermarket sweep and pushed shares in Tesco up 5.3 to 367.9p, with sentiment towards the group benefiting from an upgrade to “neutral” from “underperform” from Exane BNP Paribas. J Sainsbury edged up 1.9 to 333.6p amid a revival of vague takeover talk around the company.
On the FTSE 250, online grocery group Ocado continued the strong run that was sparked by last week’s full-year results and added 8.9 to 127.3p. The business has been touted by some analysts as a potential bid target for Wm Morrison, which rose 6 to 256.1p .
Among the biggest blue-chip fallers, there was chatter of a large sell trade of about 400,000 shares in microchip designer ARM Holdings, down 15½ at 903½p.
Oil services company John Wood Group was also on the back-foot and slipped 10 to 808p, despite announcing a contract win in Norway.
Suffering the heaviest drop on the mid-cap index was data centre company Telecity Group, struck by nerves in the run-up to its full-year results on Wednesday. Liberum Capital analyst William Shirley advised clients to take up short positions ahead of the earnings.
“We see a very real risk of downgrades at the [full-year] results on Wednesday,” he said. “New capacity delays, increasingly strong competition, and a tough macro environment are starting to impact estimates which leave little margin for error. We do not believe this is priced in.” As a result, TeleCity fell 36½ – 4.2pc – to 827½p.
Lower down the scale, holiday group Thomas Cook continued its recent strong form and rose ½ to 88½p, advancing for a fifth consecutive day and bringing its overall gain for 2013 to 84.4pc.
Today’s move was spurred by positive broker comment, with Citigroup lifting its recommendation on the company to “neutral” from “sell”, and Investec tripling its price target to 120p from 40p. The latter, which reiterated its “buy” rating, argued that a rights issue to reduce the group’s debt load was “both sensible and likely”.
After finding itself the target of short-sellers following a critical blogpost that sent the shares down 26.1pc over the course of last week, online dating company Cupid staged a partial recovery and bounced 12¾ to 148p.
Analyst Ivor Jones at house broker Numis reiterated his “buy” advice, arguing that “given the recent share price movement we expect investors will be nervous about commitment, but it is worth thinking about a first date”.
“The results are three weeks away and will give management the opportunity to update investors on trading and strategy,” he said. “They will also be able to address any questions over the operations of the business. We believe that a positive picture will emerge.”
Finally, coal producer Beacon Hill Resources was in favour and jumped 1.145 to 5.495p, a rise of 26.3pc. Traders were buoyed by news the company had secured rail access between its mine in the Tete Province of Mozambique to the port of Beira.