Equities in London have enjoyed a strong start to the day shrugging off concerns from earlier this week as the US indices eye another record high. Click here for The Trader Nicole Elliott's latest market views.
IC TIP UPDATES:
Another week, another windfall for investors in Faroe Petroleum (FPM). Just days after an Opec-orchestrated production cut caused the oil price to jump, the North Sea producer announced its acquisition of five producing fields from Norway’s DONG cost $26.7m, rather than the $70.2m originally flagged. With the shares hitting market NAV forecasts, our profitable buy recommendation is under review.
Low fuel prices, fragile consumer confidence and engineering works have created something of a perfect storm for bus and rail company Stagecoach (SGC). Cheap oil has pushed more people in the UK and US into their cars as they view petrol prices as cheap relative to recent history and demand for buses in some regional centres remains tepid due to lower high-street footfalls and even the higher age at which pensioners are now given bus passes. Its rail division also had a tough time due to the payments it has to make to government being in excess of the revenue growth it needed to balance them out. But, in spite of operating profit in the UK rail division more than halving, the £20.5m achieved was above management expectations thanks to a keen eye on costs. The market’s shown some confidence by pushing the shares up more than 1 per cent this morning but it’s still a rocky road. Sell.
Shares in buy tip Carillion (CLLN) declined 5 per cent on the morning the construction and support services group announced orders during the second half of the year were behind those taken during the first six months. Management blamed a delay in public sector decision-making around the referendum and a weak commodities market dragging on orders in the Middle East. Total orders are expected to reach £16bn by the year-end, down from £17.4bn in December 2015. The upside is management expects strong growth in revenue and increased operating profit for this year. Recommendation under review.
KEY STORIES:
Investors in Sierra Rutile (SRX) who followed Iluka’s signal last week and sold on fears that the long-touted merger would not go ahead will now be kicking themselves. A week after expressing last minute concerns at the state of Sierra’s tailings dams, the Australian group has been persuaded that everything is okay, thank you. The shares, which were suspended this morning, rose 24 per cent yesterday afternoon following the announcement.
We can hardly find fault with this morning’s pre-close trading update from Joules (JOUL), but a lack of upgrades from analysts - they’re cagey ahead of the all-important Christmas trading period - has kept the shares down. Group revenue for the first half increased by 16 per cent to £81.4m reflecting ta higher number of stores, a growing customer base and the strong performance of both new and core ranges across all product categories. Another update on Christmas is due in January.
Numis Corporation (NUM) reported a 15 per cent increase in revenue for the 12 months to September and a quarter jump in pre-tax profits. Despite carrying out fewer equity raising transactions, the broker added 16 new clients to its roster and completed 26 advisory roles. The group also developed its operations in the private placements market, taking part in a £128m private placement by Skyscanner.
OTHER COMPANY NEWS:
Accounting and payroll software group Sage (SGE) has confirmed it’s weighing options for its North American payments business, which generates about a third of organic turnover, including a possible sale.
