With the FBI backing off from its investigation of Hillary Clinton's emails once more, equity investors have piled back into the market. Click here for the latest thoughts of The Trader Nicole Elliott.
IC TIP UPDATES:
Shares in Keywords Studios (KWS) leapt 9 per cent after the video-games services group said revenues and adjusted pre-tax profits are on track to exceed the market’s full-year expectations. The outperformance has been driven by Synthesis, a recently acquired localisation and audio business that has benefited from several large projects, as well as strong trading in other divisions. Buy.
Photo-booth operator Photo-Me International (PHTM) has snapped up the photo division of Asda stores. There had been an announcement back in the summer that the deal would close at the end of August but the group has only just this morning confirmed everything is over the line. There are no further details in the announcement, but a previous one said the bid would see Photo-Me take on the supermarket's 191 photo centres and 172 self-service kiosks under a 10-year concession and its employees will transfer to Photo-Me. It will also run the online service for at least a two-and-a-half-year period. The total consideration to be paid is estimated at £5.35m and is capped at a maximum of £6m. Buy.
Shares in Redcentric (RCN) tumbled more than two-thirds after the managed IT services group’s audit committee discovered the company had misstated historical financials. The board has launched a forensic review of its past accounts and expects to restate some figures and write down historical profits. So far, it anticipates a reduction in net assets of at least £10m. It also pegged net debt at about £30m on 30 September, adding that the £25.3m figure reported for 30 March was actually materially higher. Finance director Tim Coleman has resigned and been placed on garden leave. Under review.
KEY STORIES:
Shares in HSBC (HSBA) rose 5 per cent despite the banking group reporting a 86 per cent decline in pre-tax profits during the three months to the end of September. The fall was primarily due to a $1.7bn loss on the disposal of its Brazilian unit and changes in the fair value of the group’s long-term debt. However, the Asia-focused bank also decreased its risk-weighted assets by $57bn and has achieved more than 80 per cent of its reduction target.
The bubbles are certainly rising to the top at posh tonic maker Fevertree (FEVR) this morning with the stock almost atop the Aim market. And that’s with a four-sentence trading update, with the most important bit of it for the market being that profits will be “materially ahead of current market expectations”. The shares are up 10 per cent in celebration about the new distribution gains and sales growth with existing customers.
In the race to the bottom on fares Irish carrier Ryanair (RYA) isn’t pulling up yet. Average fares fell 10 per cent to €50 (£44.60) which clearly went down well with passengers as traffic grew to 65m customers helping sales rise by 7 per cent to €1.16bn. Of course, if fares are getting cheaper, it’s important to manage your costs too. Thankfully for the airline, costs including fuel fell 10 per cent, which would have helped support margins. The group continues to buy shares back and was up to €886m worth in June. The other major point of interest for investors is the group is its plan to reduce UK growth from 12 per cent to roughly 5 per cent in 2017. Much of its planned growth seems to be focused on mainland Europe, where several airlines continue to struggle, thus opening up opportunities for Ryanair. Chief executive Michael O’Leary said the amount of primary airports it operates from (105) had for the first time overtaken the amount of secondary airports it serves (95).
OTHER COMPANY NEWS:
It’s a better than expected third quarter update from funeral provider Dignity (DTY) this morning. Revenues are up 1 per cent against 2015 to £229m, although against 2014 - which was a much more comparable year in terms of the death rate - that’s an increase of 16.8 per cent. The number of deaths is actually down 2.7 per cent year-on-year which explains Dignity’s slower growth rate so far in 2016.
