Market report: Tuesday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

SHARES of Vodafone plumbed new depths as the odds on the company becoming a 'penny stock' grew shorter. The mobile phones giant tumbled
4 3/4p to 107p on turnover of more than 600m shares.

Spread bookie Financial Spreads has slashed the odds on the number of days it takes to achieve penny status - less than 100p - to between 50 and 55 days. It said business had been brisk. Earlier this month the spread was lowered from 150-155 days to 120-125 days.

Vodafone is due to give a rundown on new subscriber numbers and the average revenue per user on Thursday. Brokers fear the numbers may not be what they want to hear.

Meanwhile, Orange dropped another 5p to 410p. MmO2, which on Monday struck its lowest since being demerged from BT last year, recovered 2 1/4p to 51 1/4p. Goldman Sachs is looking for profits of £426m in 2002 and £791m in 2003.

Sentiment in the telecoms sector has been clouded recently by gloomy trading statements from big players such as Finland's Nokia and WorldCom of the US. On Monday it was Ericsson's turn to depress investors as it unveiled new job losses worldwide.

The rest of the market continued to lose ground with an early rally soon fizzling out as further selling pressure among the telecoms took a toll. The FTSE 100 lost 30.5 points to 5191 as Wall Street made a nervous start.

US securities house Goldman Sachs has thrown its weight behind struggling television broadcaster Carlton Communications as it attempts to reach agreement with the Football League over television rights. Carlton has seen its share price collapse from a peak of 900p during the past couple of years due to mounting losses at ITV Digital and a slump in advertising revenues. Today the price fell 5p to 242 1/2p. Goldman has lifted its recommendation from 'market performer' to 'outperformer' and raised its profit forecast for 2002 and 2003, before tax and interest, by 39% and 10% respectively. It reckons fair value is 289p.

The broker cited a pick-up in advertising revenue since the start of the year which had exceeded expectations, improved cash generation and news flow. On Monday, it was announced that ITV Digital had been put up for sale. Broker Dresdner Kleinwort Wasserstein says the move is positive and calculates closure costs for Carlton and its partner Granada, down 5 1/4p at 124 1/4p, at between £50m and £60m each before any balance-sheet writedown of the value of ITV Digital.

Scottish & Newcastle rose 7p to 620p as broker UBS Warburg repeated its 'buy' recommendation on the shares and raised its 12-month target price from 580p to 650p. Rival Deutsche Bank also rates the shares a 'buy' and has raised its target price from 600p to 650p.

Sheltered housing specialist McCarthy & Stone jumped 10 1/2p to 299p ahead of results on Wednesday. Securicor rose 5p to 124 1/4p following a cross in a line of 2.5m shares at 123p.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

Geoff Foster of the Daily Mail on yesterday's trade
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