A “mystery” share price weakness for Unilever turned into a buying opportunity for investors on Wednesday, after an analyst said the owner of Marmite looked inexplicably cheap.
Jefferies’ Martin Deboo said the consumer goods company may present a “fresh buying opportunity” after its unification completes next week, with a reweighting of its stock likely to prompt major inflows.
Investors did not hang around, with the company’s shares rising 220p to £45.60, leading risers on a weak day for the FTSE 100.
Despite a positive start to the session, London’s blue-chips lost their way, closing moderately down amid a drag from financial stocks.
Barclays and Lloyds Banking Group were among the laggards, with the former dropping 6.8p to 143.4p to lead FTSE 100 fallers, after the European Central Bank warned that lenders may have underestimated the amount they will need to set aside to cover toxic pandemic-linked loans. Lloyds shed 1.4p to 38.1p.
The risk-off mood, which followed a rise on Tuesday, left about two thirds of London’s blue-chips in the red.
Risers included Melrose Industries, which climbed 2.5p to to 165.7p after saying it is trading “at the top end of the board’s expectations for 2020”.
United Utilities rose 22p to 918.2p, after issuing first-half results that were slightly ahead of consensus.
The group – which provides water and electricity across large parts of the north west of England – reported a dip in revenues and profit before tax for the six months to the end of September, but Jefferies’ Ahmed Farman said underlying earnings were narrowly ahead of expectations.
On the FTSE 250, which dropped more sharply than its blue-chip sibling, shares in animal genetics company Genus jumped after it said its performance in the four months to the end of October was “ahead of expectations”.
Genus said it had seen good demand from China as the country’s pig herds recover from the devastation of African swine fever. It closed up 254p at £41.74.
Babcock shares dipped 4.1p to 350.8p after analysts warned weak first-half results leave the company with a big hill to climb in the second half.
The defence outsourcer’s profit before tax dropped from £153m to £55.3m on slightly lower revenues, which the group attributed to a poor performance in its civil aviation operations exacerbated by Covid-19.
Among small caps, AA shares rose 2.3p to 34.1p after it finally agreed a deal with private equity firms, who have offered to buy the company at 35p per share.
The roadside rescue group reached an agreement with TowerBrook and Warburg Pincus after months of talks. The deal will need to be approved by AA’s shareholders, but given shares ended below the offer price, a rebellion looks unlikely.