MARKET REPORT: Melrose shares plummet after double downgrade

Melrose’s value fell by almost £500m after a double downgrade.

Melrose Stocks fell 7.1 percent, or 36.3p, to 474.7p, taking its value down £471 million.

While most analysts believe the stock is worth buying, UBS has broken ranks by advising clients to sell shares in the owner of the GKN aviation division.

The bank said one of the FTSE 100 group’s biggest sources of income is overvalued.

The company estimates its portfolio of revenue and risk-sharing partnerships, which supplies components such as engine fan blades and then takes a share of the profits when they are sold, is worth £2.8bn.

But that is less than half of the £5.7 billion value cited by Melrose.

As a result, UBS downgraded its rating to ‘sell’ from ‘buy’ and cut its price target to 400p from 770p. Melrose bought GKN, which made cannonballs used in the Battle of Waterloo and Spitfires for the Battle of Britain, for £8bn in a controversial deal in 2018.

The aerospace division was retained, but last year GKN’s automotive, hydrogen and powder metallurgy businesses were spun off into a standalone company called Dowlais.

London’s major markets ended the week on a positive note, with the FTSE 100 up 0.5 percent or 39.78 points to 8,327.78 and the FTSE 250 up 0.4 percent or 84.78 points to 21,189.48.

Across the Atlantic, Wall Street recovered after US Federal Reserve Chairman Jerome Powell said “the time has come” to cut interest rates.

BP has invested in a division of a Chinese company that produces sustainable aviation fuel.

The oil major bought a 15 percent stake in a company owned by Zhejiang Jiaao Enprotech for about £37 million, rising 0.7 percent, or 3.1p, to 429.3p.

Evoke, owner of the 888 and William Hill gambling venues, has acquired the operator of the Winner company in Romania.

The company will merge its division there with New Gambling Solutions into a group led by Winner CEO Nicklas Zajdel.

Romania becomes the fifth core market, alongside the UK, Italy, Spain and Denmark. Shares rose 0.2 percent, or 0.15p, to 69.2p.

Hays gave up Thursday’s gains, falling 2.2 percent, or 2.15p, to 95.25p, after the recruiter announced further cost-cutting measures to tackle ongoing labour market pressures.

Molten Ventures rose 3.7 percent, or 15p, to 422p, just days after the firm announced the value of its stake in Revolut had more than doubled to £160 million, with the banking app now worth £35 billion.

ADF, which rents costume and make-up trailers to the British film and TV industry, raised £10m by placing 20m shares at 50p each.

The company – which rose 4.9 percent or 2.5p to 53.5p – warned it was still reeling from the impact of the Hollywood strikes earlier this year.

Accesso Technology launched a £4m share buyback just a week after the ticketing software provider warned that subdued summer trading and project delays in the Middle East would hit earnings. Shares rose 3 per cent, or 16p, to 560p.