STOCK MARKET WATCHLIST: Don't hang up on BT yet



27.10.2018 22:59

Those fretting over a dividend cut at BT shouldn't hang up on the shares just yet. 

Departing chief Gavin Patterson isn't likely to axe the shareholder payout on Thursday when the embattled telecoms giant reveals its results for the first half of the year.

That's the view of City number-crunchers, who believe the appointment of Worldpay boss Philip Jansen as his successor means Patterson is unlikely to do his dirty work for him. It's more likely to happen next year when Jansen starts.

BT's departing chief Gavin Patterson isn't likely to axe the shareholder payout on Thursday when the embattled telecoms giant reveals its results for the first half of the year

Guy Peddy, an analyst at investment bank Macquarie, is pushing for a haircut to the dividend, but reckons he'll be disappointed. 'You could argue that now they've got a new chief executive, there's a reason not to [cut the dividend]. So rather than the board and outgoing chief executive taking that decision, you leave it to a new chief executive,' he says.

There have even been murmurs Jansen could look to offload Openreach, the troublesome unit that effectively controls the country's broadband, but the chairman appeared to pour cold water on that suggestion on Thursday. Change may be coming at cumbersome BT, but probably not this week. 

Sir Martin Sorrell must feel like he can't catch a break. Shares in WPP, the advertising giant he built up over 32 years before his ignominious departure in summer, tumbled more than 15 per cent last week after a dire third-quarter trading update. The share price slump means that since February last year, Sorrell's 1.8 per cent stake has shrunk in value from £430 million to £200 million. Market watchers point out that the ad mogul's new venture, S4 Capital, which has made one takeover and is on the hunt for more, has also fared badly, with shares down 20 per cent since its float. 

Investors in private hospitals group Spire could be in for more pain. At least, that's what the hedge funds will hope. Two more – Algert Global and Capital Fund Management – took out short positions last week in a bid to profit from further falls in its share price, which is down by more than half since August. Spire's recent woes have dampened speculation of another bid from Mediclinic, which owns nearly 30 per cent of Spire. Analysts now say Mediclinic should instead sell the stake they have. Either way, the decision to turn down Mediclinic's £1.2 billion bid looks more painful by the day. 

The Government's Help to Buy scheme has been criticised for lining housebuilding bosses' pockets. But don't expect Chancellor Philip Hammond to scrap it. Scribblers at investment bank Liberum think the taxpayer-funded scheme could be extended beyond 2021 in his Budget – although he could limit it to first-time buyers. Housebuilder share prices have crumbled since June due to jitters over the housing market. But Liberum thinks the sell-off is overdone. A Budget boost could help them back up, re-inflating Persimmon boss Jeff Fairburn's now notorious £75 million bonus in the process. 

Contributor: William Turvill 


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