MARKET REPORT: £370m wiped off education giant Pearson after five profit warnings in four years spook investors
Education giant Pearson saw £370million knocked off its value after analysts slashed their rating for a firm which has posted five profit warnings in four years.
The school publishing supplier fell by as much as 9 per cent during the day after BNP Paribas cut it to ‘underperform’ from ‘neutral’.
Pearson’s stock is a target for short sellers because fewer pupils are buying its textbooks in favour of online learning. In response, Pearson has been trying to increase its online presence.
Despite this, the company’s chief executive John Fallon saw his annual salary shoot up 20 per cent last month to £1.5million and it remains a favourite of star fund manager Nick Train. Shares fell 6.7per cent, or 45.5p, to 637p.
Tough lesson: Pearson fell by as much as 9 per cent throughout the day after BNP Paribas cut it to underperform from neutral
The FTSE 100 closed down by 0.4 per cent, or 28.48 to 7303.20.
Financial companies found themselves among the biggest fallers throughout the day.
This followed fears the Bank of England could start to reduce its financial support after years of propping up the UK economy.
Aviva closed down 2.8 per cent, or 15p, to 514.5p, while Lloyds Banking Group dropped 2.9 per cent, or 1.9p, to 63.6p, as it closed 100 branches.
Venture capital firm Allied Minds, which slumped 29 per cent on Wednesday, saw its shares drop below the price they listed at in 2014 in another shocking day.
Broker Jefferies reacted by slapping the firm with a double downgrade, cutting its target price by 59p to 195p and reducing its rating to ‘underperform’.
PureTech inched up as it reported a breakthrough in a video-game based treatment to help children.
The business owns companies including HawkEye (which tracks illegal shipping activity) and cyber security firm Percipient.
Even the renewed support of its largest investor Neil Woodford could not save the firm after it cut funding for seven subsidiaries.
Woodford claimed that investors are missing the company’s ‘longer-term opportunities’. Its shares tumbled 5.4 per cent, or 10p, to 175p.
Repair and insurance firm Homeserve was the biggest riser of the day as it said customers were expected to spend more on home safety next year.
The firm also said it expects results for the year to March 31 to be at the upper end of the market’s expectations.
Customer retention over the last year came in strong at 80 per cent, while its US client base grew by nearly 30 per cent to reach 2m individuals.
Homeserve’s gains extended after broker Liberum lifted the company’s price target by 100p to 760p. Shares jumped 11.7 per cent, or 66p, to 632.5p.
Atalaya Mining rocketed after reporting stronger-than-expected sales of £84.3million for the year ended December 31.
The Cyprus-based business produced more than 26 tonnes of copper over the year. This was boosted by the metal’s rising price over the period.
Atalaya shares have been on the rise after a UK High Court cleared it of breaching terms of sale after purchasing a stake in a project run by Rio Tinto from investment adviser Astor Management in 2008. Shares were up 7.1 per cent, or 9.5p, to 143.5p.
The wife of easyHotel chairman Jonathan Lane bought more than £98,000 worth of shares in the company following rumours that it will be expanding.
Kerry Lane snapped up 115,000 shares in the budget hotel firm at 0.9p each.
The company bought sites in Leeds and Sheffield in December last year. Last month it said it was considering further purchases.
Shares remained flat yesterday at 84.5p.