Satellite firm Inmarsat faces FTSE 100 relegation

Inmarsat
Shares in Inmarsat are losing altitude fast putting it in line for FTSE 100 relegation on June 1

Satellite operator Inmarsat is facing relegation from the FTSE 100 next month after shares slumped 33pc since the start of the year. 

Investors piled out of the stock earlier this month, when the satellite firm issued a profit warning after suffering a torrid first quarter due a tough trading backdrop and depressed demand.

Management spooked investors when they slashed the company’s revenue forecast for 2016 by $50m. In its wake, analysts in the City cautioned that the firm’s road back to growth looks difficult due to an under pressure shipped market and a weakness in business aviation. 

The possibility of a demotion comes exactly a year after the company, who came to prominence when its systems helped identify possible crash sites for the missing Malaysia Airlines flight MH370, was promoted to London’s benchmark index. 

If the stock continues to lose altitude, Colin Farley, of Cantor Fitzgerald, who conducted a preliminary review of the constituent positions of the FTSE 100 and 250, said Inmarsat which currently has the “lowest ranking” will be booted out of the blue chip index. 

The satellite maker will make room for Hikma Pharmaceuticals, who Mr Farley said is a “clear addition for the June review”, after falling out of the FTSE 100 in March. Jordanian-based Hikma fell out of the FTSE 100 in March as uncertainty around its outlook following its acquisition of Roxane, a US generic drugs unit of Boehringer Ingelheim, rattled investors.

Hikma
Hikma Pharmaceuticals is "a clear addition" to the FTSE 100 at the next index shake-up on June 1, Colin Farley of Cantor Fitzgerald said. 

The quarterly shake-up could also see Smurfit Kappa enter the FTSE 100 after it recently changed its main listing to the London Stock Exchange. 

Relegation often forces passive funds to sell a sizeable chunk of shares in the affected business, while getting into the FTSE 100 fuels demand for a company’s shares, as funds move to add that stock to their portfolio. 

Mr Farley sees significant changes to the constituents of the FTSE 250 ahead of the impending review, with Clydesdale Bank, Metro Bank, Country Properties and CMC Markets among the names facing promotion.

Meanwhile, Jimmy Choo may be given the boot from the mid-cap index as it grapples with a slowdown in the luxury goods markets. Ophir Energy and Lookers may also face relegation. 

The cut-off date for the quarterly review is Tuesday May 31 and an official decision will be made the following day, on June 1.

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