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MARKET REPORT: Aston Martin backers left more shaken than stirred

Backers of James Bond’s favourite car maker Aston Martin will be feeling shaken and stirred after a rocky first week on the stock market concluded with a major investment bank advising them to sell.

Jefferies analysts, led by the automotive expert Philippe Houchois, initiated their coverage of the historic firm with an ‘underperform’ rating.

Long-term investors, who bank on Aston Martin’s value going up over time, are likely to stay ‘on the sidelines’, Houchois said.

This is because the lock-up period, which prevents company insiders from selling their own shares straight away, is a relatively short six months, implying they may not have much faith the company will continue to climb.

Long-term investors, who bank on Aston Martin’s value going up over time, are likely to stay ‘on the sidelines’,  said automotive expert Philippe Houchois

Long-term investors, who bank on Aston Martin’s value going up over time, are likely to stay ‘on the sidelines’,  said automotive expert Philippe Houchois

Long-term investors, who bank on Aston Martin’s value going up over time, are likely to stay ‘on the sidelines’, said automotive expert Philippe Houchois

Though ‘few stocks if any in our coverage will deliver stronger earnings progression’ than Aston Martin, Houchois added, valuations of the company price in very high margins.

This means the luxury firm will have to beat estimates if its shares are to provide any added value.

Investors who were hoping Aston Martin could quickly turn them into Goldfinger will be sadly disappointed, as the price is more than £4 or 21 per cent lower than its 1900p float price.

Jefferies predicts it will fall even further, saying Aston Martin should be 1400p. Yesterday, the shares skidded 7 per cent, or 113p, lower to 1497p. The luxury car maker is now worth £918.8million less than it was last Wednesday.

Stock Watch – Ebiquity Marketing 

Marketing agency Ebiquity has been given the thumbs-up from the UK’s competition regulator to sell its advertising intelligence business to rival Nielsen.

The £26million deal hit a brick wall when the Competition and Markets Authority announced a probe but its concerns have been provisionally allayed. Ebiquity’s shares shot up 14.9 per cent, or 9p, to 69.5p.

Ebiquity wants to focus on its core consultancy business, and is aiming to reduce its debt pile.

Amid a broader stock market sell-off, the FTSE 100 slid 1.9 per cent or 138.81 points to 7006.93 in its biggest one-day fall since June.

Miners Fresnillo and Randgold Resources were the largest risers, as suddenly cautious investors rushed towards defensive stocks. 

Fresnillo climbed 8.7 per cent, or 66.8p, to 839p, while Randgold shot up 8.4 per cent, or 440p, to 5706p.

The wild swings continued in the FTSE 250, as Keller Group, which specialises in ground engineering projects such as house foundations and tunnels, plummeted 31.2 per cent, or 300p, to 662p.

Keller released a trading update saying that its Asia Pacific division now expected to make a loss of between £12million and £15million for the year, rather than the ‘small profit’ it had previously guided towards.

Deteriorating market conditions in the countries of the Association of Southeast Asian Nations, especially Malaysia, were to blame for the decline, it said. 

Management had recently changed in both its Asia Pacific division and waterway branch, which prompted a ‘reassessment’ of how their projects were performing.

Keller will now launch a ‘strategic review’ of both businesses.

Recruiter Hays didn’t impress investors either, as its growth rate slowed. Despite posting a 9 per cent increase in like-for-like fees, shares slumped 11 per cent, or 19.3p, to 156.7p.

Russ Mould, investment director at AJ Bell, said: ‘The market’s current state of mild panic may help explain the extremely negative reaction to an apparently solid quarterly performance from recruiter Hays.

‘The focus appears to be on a slowing in net fee growth, which was hit by the relative strength of sterling against the Aussie dollar and the euro.’

Though Hays sounded positive on the future, recruiters do best when the economy is strong and employers are confident about hiring. With economists getting gloomier, investors appeared to be anticipating the worst.

Housebuilder Countryside Properties also set alarm bells ringing, even though most of its trading update was largely upbeat.

A comment that it was seeing a ‘more subdued tone’ from buyers who own a home set shares back by 10.8 per cent, or 34.2p, to 282.2p.

 

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