MARKET REPORT: Staying solo was the perfect remedy for AstraZeneca as it becomes the largest drug maker in the UK
This may sound a little unfair, but fund manager Neil Woodford has finally got something right, even if it has taken almost five years.
He has come under fire of late for a string of horrible investment calls, backing big-name failures such as Provident Financial, Capita and Allied Minds.
Back in the spring of 2014, some in the City thought he was making another mistake when he urged Astrazeneca to reject a thumping £70billion offer from US drugs giant Pfizer.
With a market capitalisation of £79bn, Astrazeneca is now the largest drug maker in the UK, having overtaken rival Glaxosmithkline
The £55-a-share bid was 45 per cent higher than the stock’s market value at the time, and many investors were keen to take the money given that Astra’s drug pipeline had run dry and its best-selling anti-cholesterol pill was about to lose patent protection.
But chief executive Pascal Soriot, with Woodford at his back, stood firm, opting instead to slim the business down and rebuild the pipeline.
Fast forward to today and the stubbornness has been vindicated. With a market capitalisation of £79billion, not only is Astra worth more than Pfizer’s best offer, it is also now the largest drug maker in the UK, having overtaken rival Glaxosmithkline.
Shares dropped 0.2 per cent, or 12p, to 6283p, down from the all-time highs they touched earlier in the week after successful late-stage cancer and stroke trials.
Royal Dutch Shell also slipped lower after Canadian investment bank RBC Capital stripped the oil supermajor of its ‘outperform’ rating and cut its price target.
Stock Watch – Webis Holdings
Totalisator-style betting firm Webis Holdings proved to be a bad punt after its interims came up short, sending its shares down 9.4 per cent, or 0.25p, to 2.4p.
The AIM-listed company’s first half of its fiscal year was a challenging one, primarily due to the loss of a large syndicate placing bets.
As a result, fewer punts were placed through its platform.
This led to an overall pre-tax loss for the half-year period of £444,200, up from a loss of £14,280 a year earlier.
Analysts cast doubts over the sustainability of Shell’s dividend – possibly the most attractive reason for investing in the Anglo-Dutch titan.
If Shell wants to avoid cutting its annual payout for the first time since the Second World War, the abacus-rattlers across the Pond reckon it will need to buy back an extra £22.5billion of shares, on top of the £18.8billion worth it has committed to buy back over the next two years.
While that will make the dividend more sustainable, they argue it will limit bosses’ power to invest in its portfolio. Shares fell 0.6 per cent, or 14p, to 2384.5p, although that it still well below RBC’s reduced target of 2750p.
The FTSE 100 closed the session down 43.92 points, at 7107.2, with many of the big dollar earners not reacting well to the pound’s resurgence.
Wealth manager St James’s Place was bottom of the table, down 3.6 per cent, or 35.6p, to 941.2p, after a steady rise in annual profits was overshadowed by a continued slowdown in new business growth.
Pre-tax profits jumped by 14 per cent in 2018 to £211.9million, but that was well short of the 32 per cent growth it notched up a year earlier.
Net inflows – the amount of money being invested into its funds – rose 8 per cent over the year to £10.3billion, following a 40 per cent increase in 2017.
Among the small caps, printing company De La Rue, which last year missed out on a lucrative deal to print the UK’s new blue passports, headed north.
Shares rose 2.2 per cent, or 9p, to 428p after the world’s largest banknote printer inked a £3.5million deal that will see its track-and-trace system used on all 1.7billion packets of cigarettes and tobacco sold in the UK.
The five-year contract was awarded by the Government in a bid to crack down on potentially deadly counterfeit products.
Down on AIM, Vimto owner Nichols fizzed 1 per cent, or 15p, higher to 1550p after hiking its dividend 15 per cent after a record set of results.