Market report: City tempted back to ‘unloved’ Rolls-Royce

Investors have fallen out of love with Rolls-Royce after a string of profit warnings over the past few years, but they were enticed back to Britain’s flagship engineer today.

The catalyst was an upgrade to Buy from analysts at UBS, who urged clients to pile into Rolls.

They say the aircraft engine-maker has become “an unloved name”, with the market sceptical about management’s ability to turn the business around.

“In our view, Rolls will benefit from an early-cycle recovery in its non-Aero businesses.

“Signs of improvement in group performance should provide comfort to investors about the restructuring potential,” analyst Celine Fornaro said.

Earlier this week, it emerged that ValueAct, the US activist investor which has a seat on the Rolls board, had raised its stake to 11%.

The UBS upgrade sent Rolls shares up more than 2%, although they ran out of steam later in the day — up 6p, or 0.9%, at 673.5p.

Decent manufacturing data from China boosted miners and helped the FTSE 100 up 66.50 points to 7165.65.

Donald Trump’s calls for drug- makers to cut the “astronomical” prices of drugs were diluted by plans to speed up approvals of new medicines and slash taxes, which boosted shares in pharmaceuticals companies.

After his meeting with senior US drug bosses, Hikma Pharmaceuticals surged 55p, or 3%, to 1879p and Shire strengthened 110.54p, or 2.5%, to 4490.04p.

Online property group Zoopla continued its spending spree by buying Hometrack, the housing data specialist, for £120 million. Investors welcomed the latest deal as the shares rose to a new high of 377p, up 10.8p, or 3%, today.

Strong results from Apple last night lifted Imagination Technologies, which designs the graphics chips for the iPhone, by 3.5p to 242.25p.