H1 expectations to spur trading in O2 stock

H1 expectations to spur trading in O2 stock

	Published : Fri, 21 Oct 2005 13:05 By : Richard Owen Print this Story

LONDON: There’s more than one good reason why most analysts’ eyes are currently on O2. Traders and shareholders waiting for a takeover bid for this mobile network operator could be heading for a pleasant surprise, according to analysts.

Most analysts agree that the stock is likely to bring good news on November 16 when it announces its first half results. The numbers are expected to be in line with or exceeding market expectations and consequently to boost dividend. The company is also expected to announce a share buyback programme worth as much as £2bn.

Full year dividend could be raised from 4.5p a share to 5p and possibly even over 6p a share next year.

The company ranks sixth among Europe’s largest mobile phone groups. Its financial performance has been beyond fault with stupendous cash flows because of a huge growth in its UK customer base and its German unit headed for a turnaround. It now plans to launch an upgraded 3G network using high-speed downlink packet access (HSDPA) technology on the Isle of Man.

This upgraded service will enable customers to send and receive emails with large attachments, play interactive multi-player games and watch DVD quality video clips. The service will start from November 1 and expected to trigger a fresh wave of demand for mobile video and music services.

Most analysts put a ‘buy’ recommendation on the stock with a price target of 175p and next week the stock could see some spikes.

Meanwhile the FTSE 100 kept giving mixed signals, rising during early trading but retreating 3.7 points to close at 5164.1. Some blue chips also disappointed after a Wall Street reported a weak start at opening bell.

The FTSE 250 showed a mini rally advancing 65.1 points to 7,486.6 particularly as the oil and gas sector seemed very active. Aminex rose 1.75p to 19.25p. Paladin Resources rose 74.5p to 349.5p after Talisman Energy made a £1.2bn bid; Burren Energy was up 31.5p to 752p; Dana Petroleum up by 51p at 822p; Tullow Oil 11.75p ahead at 230.5p and Venture Production rose 35p to 480p.