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FTSE 100 movers: Melrose rallies on Citi note; supermarkets in the red
(Sharecast News) - London's FTSE 100 was up 1.1% at 8,634.08 in afternoon trade on Friday. Melrose Industries was the top gainer after Citi reiterated its 'buy' rating on the stock as it said it "presents a compelling investment opportunity".
The bank, which has a 735p price target on the stock, acknowledged investor concerns regarding variable consideration impacting free cash flow.
"However, Melrose forecasts cash flow directly from expected shop visits/deliveries, with EBIT derived from cash," it said.
"We continue to believe the strength of the business lies in the strong, long-term cash generation from RRSPs, which supports the company's projected free cash flow of £600m in FY29."
Citi noted that the stock is now trading at a significant discount to peers, even adjusting for increased risk.
"We therefore believe Melrose presents a compelling investment opportunity."
Precious metals miner Fresnillo shone as gold prices topped the $3,000 mark for the first time in history as investors continue to seek safe havens amid fears about the global economy and the uncertain geopolitical environment.
Defence firms BAE Systems and Rolls-Royce were also among the gainers.
Supermarket stocks fell after Asda said it would be undertaking a "substantive" programme of investment in price, availability and the shopping experience to get the business "firing on all cylinders again", which will materially dent profitability this year.
Sainsbury's, Tesco and M&S all lost ground.
FTSE 100 - Risers
Melrose Industries (MRO) 531.40p 7.09% BAE Systems (BA.) 1,639.00p 3.05% Fresnillo (FRES) 926.50p 3.00% Rolls-Royce Holdings (RR.) 792.00p 2.67% easyJet (EZJ) 486.20p 2.62% Anglo American (AAL) 2,314.00p 2.62% Schroders (SDR) 388.60p 2.59% JD Sports Fashion (JD.) 72.98p 2.38% HSBC Holdings (HSBA) 870.90p 2.09% IMI (IMI) 1,986.00p 2.06%
FTSE 100 - Fallers
Reckitt Benckiser Group (RKT) 5,066.00p -2.95% Sainsbury (J) (SBRY) 248.40p -2.51% WPP (WPP) 617.40p -2.31% Pershing Square Holdings Ltd NPV (PSH) 3,610.00p -1.69% Tesco (TSCO) 366.00p -1.48% Spirax Group (SPX) 7,045.00p -0.91% Marks & Spencer Group (MKS) 350.30p -0.71% Convatec Group (CTEC) 255.80p -0.62% British American Tobacco (BATS) 3,172.00p -0.56% London Stock Exchange Group (LSEG) 11,035.00p -0.45%
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