Melrose Shares Drop After UBS Sell Advice
- UBS issued a sell recommendation for Melrose shares, causing a sharp decline in their value.
- Most analysts suggest that Melrose shares are still a good buy despite UBS's advice.
- Investors react to UBS's contrasting stance on Melrose stock.
Melrose Industries saw its market value plummet by nearly £500 million after UBS downgraded its stock from 'buy' to 'sell.' The company's shares fell 7.1 percent, or 36.3p, closing at 474.7p. UBS cited concerns over Melrose's revenue and risk-sharing partnership portfolio, which includes components for aerospace engines, estimating its worth at £2.8 billion. The investment bank also reduced its target price for the stock from 770p to 400p, diverging from the generally positive outlook held by other analysts. In contrast to Melrose's struggles, London's main stock markets ended the week on a positive note. The FTSE 100 rose by 0.5 percent, or 39.78 points, to reach 8327.78, while the FTSE 250 increased by 0.4 percent, or 84.78 points, to 21,189.48. This uptick was bolstered by a rally on Wall Street, following comments from US Federal Reserve Chairman Jerome Powell indicating that the time had come to consider interest rate cuts. In corporate news, BP announced a £37 million investment for a 15 percent stake in a Chinese sustainable aviation fuel company, which contributed to a slight increase in its share price. Meanwhile, Molten Ventures reported a significant rise in the value of its stake in Revolut, leading to a 3.7 percent increase in its shares. ADF and Accesso Technology also made headlines with share placements and buybacks, respectively, as they navigate challenges in their sectors.