MARKET REPORT: ABF star Primark set to earn US stripes

HOPES that its Primark business will crack the US market brought owner Associated British Foods into fashion yesterday.

Shoppers carrying Primark bags GETTY

Eight Primark stores are set to open in America

Shares in ABF were marked up 5p to 3114p after Morgan Stanley told clients to buy with a 3695p target, predicting Primark will generate 89 per cent of the group’s profit growth for three years following next autumn’s rollout in America, offsetting a deterioration in its sugar business.

Primark has secured eight properties in the US from a partnership with Sears, which would help it expand there much quicker than in Germany and France.

The broker added: “A potential success in the US market could reshape the group and reduce the size of the gap between Primark and H&M much faster than initially anticipated.”

High street giant Marks & Spencer dropped½p to 480½p despite JPMorgan Cazenove starting coverage with a buy rating and 550p target price.

Thomas Cook’s share price plunge put tour operator rival TUI Travel in the shade, down 9p to 417½p, while plumbing and heating supplies distributor Wolseley dipped 33p to 3531p after a mixed trading update.

A potential success in the US market could reshape the group and reduce the size of the gap between Primark and H&M much faster than initially anticipated

Orthopaedics group Smith & Nephew reversed 16p to 1107p despite potential US suitor Stryker being cleared as of tomorrow under takeover rules to make an offer.

Dealers believe there is a good chance Stryker will bid, but the reluctance of S&N to sell makes a deal unlikely unless the price is pitched at above £14 a share.

Defence technology firm Qinetiq Group retreated 9½p to 196½p amid fears that profit margins will come under pressure as the UK Ministry of Defence’s procurement arm Defence Equipment and Support drives a harder bargain.

Support services and construction group Interserve built a 7½p gain to 585p after the launch of a new joint venture business to provide facilities management services throughout Saudi Arabia.

Ongoing takeover chatter underpinned construction services group Balfour Beatty 8p to 184¾p, but online poker group Bwin.Party Digital eased 1p to 106p despite talk of an imminent bid approach.

Copper producer Antofagasta topped the blue chip gainers with a 27½p rise to 761p as broker Bernstein turned buyer from its previous neutral stance with a 1025p target.

Fellow mining heavyweights Anglo American and BHP Billiton struck it 18p and 12p richer to 1347½p and 1605½p respectively.

Aero-engine maker Rolls-Royce, which has lost nearly a third of its market value this year, was fired up 6p to 867p as Morgan Stanley began coverage with a buy rating and 1040p target. The FTSE 100 Index closed 1.97 points adrift at 6729.17.

On Wall Street, the Dow Jones industrial average climbed by 12.81 points to 17,827.75 by the close of trading.

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