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Sector movers: Telecoms and tobacco boosted by brokers
Telecoms and tobacco led the way as London stocks advanced on Wednesday.
In telecoms, BT Group was on the rise as investors appeared to cheer an upgrade to 'buy' from 'hold' at Jefferies and ignore news that the company has been fined £77,000 by the Information Commissioner's Office for sending nearly 5m nuisance emails to customers.
One day after it reported a solid set of final results, Telecom Plus was also being lifted by analysts' opinions. JP Morgan Cazenove said the company's price-competitiveness would be held back until there was more clarity on the proposed energy price cap. Analysts said "it is hard to see the shares re-rating" until then, though the 1,200p price target was still suggesting some upside for investors.
Tobacco giants Imperial Brands and British American Tobacco were standout gainers as broker Peel Hunt initiated coverage of both stocks at 'buy'. Analysts said Imperial Brands was the top pick, offering investors a "resilient stream of cash flows, pricing power, high margins, and strong returns on capital with 25% upside".
As for BAT, the shares are off 34% from their highs and trade at a 40% discount to the European staples sector - the widest in 15 years. "The market discounts the loss of all US profits after 2020, which is highly unlikely. The current rating fails to appreciate BAT's strong and durable brand positions."
Top performing sectors so far today
Fixed Line Telecommunications +2.66%
Tobacco +2.57%
Food & Drug Retailers +1.85%
Industrial Metals & Mining +1.82%
Leisure Goods +1.52%
Bottom performing sectors so far today
Oil & Gas Producers -0.87%
Industrial Transportation -0.66%
Household Goods & Home Construction -0.44%
General Retailers -0.37%
Life Insurance -0.31%