Markets report: US forecast puts Pearson on new page

What happened to the FTSE, pound and UK companies on the markets today?

Analyst optimism boosted Pearson yesterday, sending the education giant’s shares to the top of the FTSE 100’s risers.

UBS’s Adam Berlin said the US higher education sector presented a “material opportunity” for Pearson, boosting its target price to 650.

Following a deep dive into the company’s operations, he said Pearson’s next-generation digital learning products could drive higher adoption, especially as US higher education institutes adapt to the pandemic.

A drop in purchases of physical editions could also cause the second-hand market to dry up, driving more students to e-books instead.

Earlier this month, Pearson said its revenue from US higher education “courseware” was down 14pc in the third quarter of the year.

Pearson, which has fallen by nearly a fifth this year, ended up 15.2p at 527.6p.

It was one of a limited number of bright spots on a tough day for global stocks, which saw markets tumble on both sides of the Atlantic. The mood was set ahead of the session as German software giant SAP cut its outlook for revenue growth. Its plunge caused the country’s blue-chip Dax index to drop sharply. Although falls were more limited elsewhere in Europe, the US joined the sell-off with the benchmark S&P 500 index down 1.9pc.

Notable movers in London included pharma giant AstraZeneca, which rose 134p to £80.77 after the company said it had seen a positive response to its experimental Covid-19 vaccine.

British Airways-owner International Airlines Group led FTSE 100 fallers, dropping 8.3p to 100.7p on expectations that several European countries will introduce new lockdown measures in the coming week. Rolls-Royce, similarly exposed to continued aviation-sector pressure, also fell 17.6p to 226.1p.

SAP’s revenue warning hit British software group Sage, which dropped 43.2p to 650.8p amid wider concerns about the strength of the IT sector.

Elsewhere, individual moves were limited by moderate newsflows at the onset of a major week of reporting that will begin in earnest today.

Mike Ashley’s Frasers Group led risers on the FTSE 250 amid reports that the retail tycoon may make a second bid for department store Debenhams as its sales process reaches a conclusion this week. Shares rose 17.2p to 392.2p.

Travel operators were badly hit among mid-caps, with Tui dropping 28.7p to 294.2p. FirstGroup and National Express both also fell, the former more severely at 3.3p to 48.3p, after Jefferies analyst Becky Lane cut estimates for both groups, warning that they were facing a slower-than-expected recovery in demand for US student bus services due to the pandemic.

She warned the downturn may become worse during the festive period, with campus footfall already low. National Express fell 2p to 153p.