MARKET REPORT: Takeover buzz gives wings to airline shares

Airline stocks soared on the back of talk that the owner of British Airways was looking at buying rivals.

After returning to profit over the summer, IAG is understood to be on the hunt for takeover targets.

The group owns BA as well as Iberia, Vueling and Aer Lingus, and agreed to buy Air Europa for around £850m in late 2019 but the Covid pandemic derailed the deal.

British Airways owner IAG is understood to be on the hunt for takeover targets

IAG wants to revive the takeover and speculation is mounting that it could even target other struggling rivals such as Easyjet or Portuguese flag carrier TAP. 

Luis Gallego, IAG’s boss, last week said: ‘We will only do what makes sense but we see there are opportunities to be stronger. We are a group that wants to consolidate the industry.’

Liberum analyst Gerald Khoo said if a deal were to ever emerge between IAG and Easyjet it would be ‘challenging’ to get past the competition authorities.

Shares across the industry rose as IAG gained 5.5 per cent, or 6.28p, to 121.56p, Easyjet surged 6.1 per cent, or 19.9p, to 348.4p and Wizz Air rose 6.5 per cent, or 104p, to 1715p.

The FTSE 100 edged up 0.7 per cent, or 46.86 points, to 7094.53 and the FTSE 250 inched lower by 0.2 per cent, or 26.74 points, to 17889.93.

Centrica surged 4.7 per cent, or 3.46p, to 76.62p following a series of upbeat broker ratings after the British Gas owner last week announced the reopening of its Rough storage facility.

Barclays raised the stock’s target price to 144p from 121p, while Jefferies upgraded to ‘buy’ from ‘hold’ and Citi said it preferred companies such as Centrica which have ‘little debt and robust balance sheets’.

Blue-chip banking stocks also enjoyed favour with the City. Natwest shot up 4.4 per cent, or 9.9p, to 234.8p after Credit Suisse raised its target price to 370p from 350p.

UBS maintained its ‘buy’ rating and target prices for Lloyds (up 1.8 per cent, or 0.75p, to 42.02p) and Standard Chartered (up 0.1 per cent, or 0.6p, to 520.2).

Meanwhile, consumer goods giant Reckitt Benckiser rose 1.8 per cent, or 102p, to 5780p after Jefferies raised the Dettol and Nurofen maker’s rating and target price.

Abrdn was up 4.2 per cent, or 2.75p, to 159p after it kick-started the second phase of its £300million share buyback programme.

Stock watch: Argo Blockchain on the brink 

Argo Blockchain warned last night it could collapse without extra funds.

The London bitcoin miner signed an agreement with an investor last month to raise around £24m through issuing new shares.

But the group said it does not believe the deal can be completed and is now looking for other ways to raise funds, including the sale of around £4.8million of Bitcoin machines.

Argo Blockchain shares, which soared last year, tumbled 50.2 per cent, or 7.83p, to 7.77p.

Bodycote swung into reverse even though it poached the deputy finance boss of Rolls-Royce (up 1.5 per cent, or 1.16p, to 78.15p).

The heat treatment specialist said Ben Fidler will become chief financial officer next May. Shares fell 2.4 per cent, or 12.44p, to 495.6p.

A company that makes the paper used to create Remembrance poppies for the Royal British Legion each year issued a profit warning amid the rising cost of energy and raw materials. 

James Cropper, which also produces packaging for luxury brands such as Mulberry (flat at 210p), Burberry (down 0.1 per cent, or 2p, to 1815p) and Selfridges, reduced its profit forecast for 2023 to £2million – less than half the £5.4million expected by analysts.

The group’s energy bill soared 148 per cent compared with a year earlier, while the cost of its raw materials shot up 20 per cent. Shares plunged 14.6 per cent, or 145p, to 850p.

Investors in Lok’n’Store cheered after the storage provider delivered record revenue and profits.

Revenue for the year to July shot up 22.9 per cent to £26.9million while profit soared 37.5 per cent to £16.4million.

Looking ahead, the group said the opening of four new stores within the next year and price increases will add further revenue and profit growth. Shares surged 15 per cent, or 125p, to 960p.

Software and data company 4Global sealed a £4million contract over five years with a ‘major sporting infrastructure project’ for a city in the Middle East. Shares soared 19.1 per cent, or 11p, to 68.5p.

This post first appeared on Dailymail.co.uk