Fresh from creating waves with his first piece of research, Panmure Gordon’s young online retail analyst was doing so again with his second. Last month, Michael Stewart, brought over to Panmure from Shore Capital, kicked off coverage of AO World by telling clients that the shares were worth less than half the price the market then had on them and urging them to dump the internet purveyor of fridges and washing machines.
Not the usual marketing document masquerading as independent research, then. A profit warning later, Mr Stewart’s prescient call proved on the money.
Yesterday, he turned his attention to Boohoo.com. This is the online clothes boutique whose shares tanked 41 per cent on the day in January it dropped a profit warning, nine short months after floating, and which raised the market’s collective eyebrows earlier this week by deciding to return cash to shareholders by buying back up to a tenth of its own shares.
A “fundamentally sound” business, in Mr Stewart’s opinion, but one “crying out for an activist investor to get involved and offer a helping hand”. Valued at £280 million, with £54 million in cash and no debt, Boohoo could provide an entrepreneur “with a low-cost route to market”, he added.
Two such cash-rich entrepreneurs fitted the bill, Mr Stewart suggested. One is Sir Philip Green, the retailer who put Topshop, River Island and other names in the Arcadia empire he built on to a high street near you. The other is Teddy Sagi, who as well as founding Playtech, the £2.2 billion supplier of software to the gaming industry, and recently buying Camden Market in London, also backed Market Tech Holdings, which has bought, among other things, Fiver London, an online value fashion retailer.
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Unlike AO, Mr Stewart told clients to buy Boohoo shares, on which he set a target price of 32p and which then rose 1¾p, or 6.5 per cent, to 28¾p. Meanwhile, AO dipped a penny to 191¼p. The wider stock market rallied a little more, with the FTSE 100 reclaiming a further 39.6 points to 6,761.1 as the dollar’s muscular advance paused and a little-known Spanish bank popped up to bid for TSB, 62p higher at 326p.
AstraZeneca, up 174½p at £44.79 on optimism about impending results of trials of a heart drug, was also rumoured to be interested in paying $175 a share for the Nasdaq-quoted BioMarin Pharmaceutical. Other potential buyers mentioned were Switzerland’s Roche and France’s Sanofi.
Obtala Resources, a specialist in food and agriculture in Africa, whose shares were chased sharply higher this month amid speculation of encouraging news about its assets, unveiled Kishugu International, a big name in the timber business, as a partner for its forestry projects in Mozambique. The pair, which have combined revenues of about $80 million, intend to bid jointly for a contract to manage forestry in Brazil. Obtala shares dipped a ha’penny to 10¼p on profit taking.
Finally, Zoltav Resources, the exploration minnow in which Arkadiy Abramovich, the 21-year-old son of the Chelsea owner Roman Abramovich, owns a near 40 per cent stake, added 2½p to 47½p after revealing that its West Siberian oil field contains more than one billion barrels of crude, more than twice as much as previously thought.
Wall Street report A sharp rally in the dollar relented, helping push the stock market to its best day in five weeks, after a weak retail sales report raised questions about the strength of the economy. The Dow Jones industrial average rose 259.83 points to 17,895.22.
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