MARKET REPORT: Swipe from Goldman Sachs analysts sends shares in St James’s Place lower

Wealth manager St James’s Place has been rocked this year by allegations of forgery, mis-selling, lavish staff spending and is facing a legal case brought by former footballers.

But it was a swipe from Goldman Sachs analysts that sent shares in the FTSE 100-listed group lower yesterday.

Goldman bucked the City trend and downgraded the Cirencester-based business, which looks after the savings of hundreds of thousands of Britons, from ‘neutral’ to ‘sell’, and kept its target price at 900p. They expect St James’s debt to rise and that this, in turn, could hold back dividend growth.

Some 12 of 17 brokerages have a ‘buy’ stamp or higher on St James’s stock, and its share price has shrugged off the flood of scandals to rise by 15 per cent so far this year.

And many will hope the addition to its board of Dame Helena Morrissey, former head of Legal & General’s personal investing business, as a non-executive director, will help clean up concerns around its fees and charges. But Goldman’s downbeat take sent shares down 2.7 per cent, or 30.5p, to 1088.5p by last night’s close.

Mid-capper Royal Mail also lost ground (down 4.2 per cent, or 9.2p, to 208.5p) after Bernstein analysts went so far as to apologise for saying in June that investors would be wise to buy its stock. They downgraded the 503-year-old postal service to ‘market perform’ from ‘outperform’ and trimmed its target price from 250p to 225p.

Brokers at the US group said they were wondering ‘if the wheels are already starting to come off Royal Mail’, amid a drop in the number of letters being sent.

But, it should be noted, the note was written before analysts knew the Communications Workers Union had been unsuccessful in its attempt to get the go-ahead to strike.

It was a sluggish end to the week for the FTSE 100 and FTSE 250, which have been treading water while traders wait for a breakthrough in US-China trade talks and the Brexit deadlock. The Footsie closed down 0.9 per cent, or 69.9 points, at 7346.53, while the mid-cap FTSE 250 index fell 1 per cent, or 210.95 points, to 20,812.6.

A series of deals drove some of the other major share price moves of the day. Commercial vehicle hire group Northgate tumbled 9.7 per cent, or 34p, to 316p, after it agreed a share-for-share merger with accident management firm Redde.

Northgate shareholders will own 54 per cent of the combined group and Redde’s will have 46 per cent.

Northgate’s chairman Avril Palmer-Baunack, the chief executive of British Car Auctions and the best-paid mid-cap boss after pocketing £30m last year, will keep her role, while Redde boss Martin Ward will step up to the new chief executive position. The companies reckon they can save £10m a year by merging.

Racing game software developer Codemasters Group surged 12.1 per cent, or 25.5p, to 235.5p after it snapped up rival group Slightly Mad Studios, which is known for its Project Cars racing simulator, for £23m.

And fellow AIM-listed Aggregated Micro Power Holdings rocketed 25 per cent, or 17p, to 85p, after it agreed to be taken private by a Spanish infrastructure fund for £63m, or 90p per share.

The investment arm of insurer Aviva, cannily named Aviva Investors, put one of its biggest West End properties up for sale – a 37,440 sq ft block on the corner of Oxford Street and New Bond Street – for £130m.

Shares in the insurance giant rose 0.5 per cent, or 1.8p, to 403.8p.

Outsourcer Mitie Group advanced 0.5 per cent, or 0.6p, to 131.2p after it appointed Andrew Peeler, the former chief executive of parcel delivery firm Yodel, as its new finance boss.