Not even a multi-million pound share sale by one of its directors could dampen investor enthusiasm for Arm.
The chipmaker climbed 23p to 611p, making it the biggest riser in the FTSE 100 despite chief technology officer Mike Muller raising just over �2m by selling 350,000 shares at 579p each. The company has been in demand since recent news of its link-up with Microsoft and hopes it will increase its presence in the smartphone and tablet computer markets. Numis added to the positive mood by raising its target price from 600p to 660p. At its most optimistic the broker said Arm could address 67% of the semiconductor market which would lead to a target price of �10.
Helped by Arm and a rise in commodity companies, the FTSE 100 finished 53.65 points higher at 6051.03, its best level for nearly three weeks. Angus Campbell, head of sales at Capital Spreads, said:
The FTSE commenced the week where it left off last week with a concerted move to the upside led by commodity stocks that were buoyed by record high copper prices. As emerging economies continue their voracious quest to grow, in particular China, the demand for metals and other commodities will only get stronger. This in turn will keep the global economy strong and as a result equity markets will continue to rally higher so long as this is the case.With copper climbing to yet another new peak on supply concerns - especially from Chile - and expectations of growing demand, Xstrata added 50.5p to 1467.5p ahead of its results tomorrow. Credit Suisse issued an outperform rating on the company, saying:
There's been a clear scramble to buy equities as investors don't want to miss out on the next leg higher.
The UK corporate reporting season is yet to significantly get underway, but we're due to get into the swing of things shortly and earnings are expected to be strong, giving further weight to the argument that this rally is set to continue.
We believe Xtrata's more nimble and aggressive approach to growth should deliver greater volumes than peers over the next five years. Xstrata remains the large cap to own for growth in our view and we continue to favour its significant exposure to copper and thermal coal.
Citigroup was also positive on the company. It said:
We upgrade our target price to �20.11 and reiterate our buy call given superior growth, ability to do further accretive M&A deals and cost reduction potential.
Meanwhile Randgold Resources rose 130p to �51.10 after its full year profits climbed 43% thanks to the buoyant gold price.
Rexam added 12.2p to 368.9p on reports the packaging group had appointed advisors to help sell its beverage and specialities arm, which could raise �200m.
GlaxoSmithKline was 18p better at �11.89 despite news it had revised its US label for diabetes drug Avandia to include new restrictions on use, following a review by the Food and Drug Administration.
AstraZeneca added 24p to �29.57 despite another drug disappointment. It has halted a late stage Phase 3 trial of experimental prostrate cancer treatment Zibotentan after disappointing results. Mike Mitchell at Seymour Pierce said:
Few will have expected a positive outcome from the Phase 3 study 15 following September's [study 14] failure. However, investors should interpret this as another blow to the zibotentan programme (a sub-billion market opportunity) and a further reflection of what we view as the company's wider challenges in delivering successful innovation. It should not surprise investors that we stick with our reduce recommendation.
After US group Fortune Brands confirmed plans to spin off its non-spirits business, Nomura considered the prospect of Diageo, up 14p to �12.48, taking a look at the remaining drinks businesses. Nomura said:
We believe that Diageo would be interested potentially in three Fortune brands ? Jim Beam bourbon, Sauza tequila and Makers Mark bourbon. We estimate the value of these brands at $6bn, on average 15 times earnings multiple, with a total value of the business at $8bn, on average 13 times multiple.Rolls-Royce edged up 2p to 645.4p ahead of its results this week, which will bear the scars of the recent problems with one of its Trent aero-engines. In a buy note, Investec said:
We would accept that, both for regulatory and commercial reasons, Diageo would not want 100% of the business and would require other buyers to either work in a consortium or buy some assets in a secondary transaction.
Group margins are expected to be down principally due to mix, higher R&D and Trent 900 charges in civil aerospace offsetting positive mix changes in marine. Our pre-tax profit and earnings per share forecasts of �948m and 38p are slightly above Reuters consensus of �935 and 37.6p.
Lower down the market Chaucer Holdings closed 8.75p higher at 61.5p as the Lloyd's of London insurer revealed it had received a number of takeover approaches.
Source: http://www.guardian.co.uk/business/marketforceslive/2011/feb/07/arm-miners-lift-ftse
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