Cash return hopes boost Experian shares

Experian, the consumer credit reference agency, was endorsed by an upgrade from Credit Suisse and only missed out on the FTSE 100's top spot after M&A fever swept through the energy sector.

Oil producer Shell's £47bn bid for BG ensured the FTSE's highest position was claimed by the target company - up 26.6 per cent to £11.53.

In second place, Experian rose 2.7 per cent to £11.81 after it was praised for its "prodigious" cash generation, by Credit Suisse, which lifted its rating on the stock to "outperform" from "neutral" and its target price to £13 from £11.

Analyst Andy Grobler said Experian's free cash flow yield was too high for a company that can "sustainably generate mid-single-digit organic growth with cash returns, M&A opportunities and rising margins".

He added: "It could sustainably return 6.5 per cent over the next four years - although in practice a portion of its excess cash flow will be used for M&A, which should, we think, be value creative."

The FTSE 100 had earlier reached a session high of 7,012, led by energy and resource stocks, but a limp first couple of hours of trade in the US, together with falling oil prices, undermined the merger boost, leaving the main index 24 points, or 0.4 per cent, lower at 6,937.41.

The largest negative weight was Shell, down 8.6 per cent to £20.19, after it announced its offer for BG.

BP, whose recent share price fall had been suggested by some analysts could put it on an attractive mark for a takeover, gained 0.5 per cent to 457.3p.

Energy stocks were dominant on the mid-cap index too. Tullow Oil, recently relegated to the FTSE 250 after losing two-thirds of its market cap since July, gained 4.4 per cent to 313.6p, while Ophir Energy added 7.3 per cent to 155p.

Kantar's latest market share data in the UK grocery sector was consumed with growing interest as the big four's market share dropped to its lowest in two years, although the 72 basis point decline was the slowest in more than two years.

Sainsbury stood out as a positive, claiming market share growth of 20bp in the first quarter, following a 28bp decline in the previous quarter.

"This should assure investors concerned about whether Sainsbury is investing enough in its proposition in response to price cuts at Tesco," said Pradeep Pratti at Citi.

Shares in Sainsbury gained 0.5 per cent to 270.7p while Tesco, which lost 44bp in market share, fell 1.7 per cent to 246.8p.

St James's Place climbed 0.8 per cent to 982.5p after Panmure Gordon raised its target price on the asset manager to £11.25 a share from £10.57 and maintained its "buy" recommendation.

Panmure analyst Barrie Cornes said: "SJP has a great business model, is run by a very capable management team and the shares are attractively valued."

M&A rumour in the media sector suggested France's Vivendi was looking at buying pay-TV operator Sky. In the absence of comment from either side, Sky's shares advanced just 1.6 per cent to £10.39.

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