Shares in London are marginally ahead despite news of German GDP slowing. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Full year results from car dealer Pendragon (PDG) are slightly ahead of market expectations, but that didn’t stop the stock falling 5 per cent this morning. The numbers show underlying sales growth from all segments - used cars are up 9.5 per cent, new cars up 3.1 per cent and aftersales up 7.3 per cent - but operating and gross profits at the Stratstone business are down, driven by new car margin declines. Analysts have been led to understand that this has been an issue linked to specific brands, although there’s no naming names. Analysts at Liberum also suggest that the stock’s relatively good run year-to-date could temper their performance today. Our recommendation is under review for now, more to follow.
Specialist communications provider Satlink Satellite Solutions has chosen to integrate Inmarsat’s (ISAT) maritime software Fleet Xpress into over 1500 vessels.The uptake of the software has been excellent since its launch last year, according to the president of Inmarsat Maritime, Ronald Spithout. Shares are up modestly in early trading, but this follows a tough few months: shares are down almost a fifth since the start of the year. Buy
A strong set of full-year results from Acacia Mining (ACA) pushed shares in the African gold producer up by 6 per cent in early trading. Though the market was already aware of output of 829,700 ounces, and all-in sustaining costs of $958 an ounce were in line with expectations, investors warmed to the doubling of net cash, big final dividend hike and a very bullish forecast growth in production to as much as 900,000 ounces in 2017. Our buy call is under review.
A quartet of biotech announcements from IC tips Hutchison China Meditech (HCM), Vernalis (VER), Allergy Therapeutics (AGY) and Horizon Discovery (HZD), have received varying responses from investors. Allergy Therapeutics is up almost 3.5 per cent in early trading after the group’s novel dust mite allergy product reported good safety data in a clinical trial. Chi-Med’s shares responded similarly well to news that the group and its partner AstraZeneca (AZN) will be presenting data from their phase two cancer drug at a cancer symposium later this week. Vernalis reported good results from a partnered clinical trial which has triggered a $3m milestone payment. The shares have looked downbeat for about a year, so this morning’s 2 per cent rise is hardly likely to excite investors. Horizon’s morning announcement was met by a similar lack of enthusiasm, but that’s often the case when the cell line specialists make an announcement. This time the group has signed “a master service agreement with a top three pharma company”. We continue to see excellent growth prospects for all four of these biotech groups and retain our buy recommendations.
KEY STORIES:
High street retailer Next (NXT) is having a bit of a management reshuffle. It’s long-standing chairman John Barton is retiring, effective from 1 August 2017, at the age of 72. His replacement comes in the form of former Bunzl chief executive Michael Roney who, from today, steps in as non-executive director, deputy chairman and chairman designate.
OTHER COMPANY NEWS:
Shares in travel group Tui AG (TUI) are up more than 3 per cent this morning following first quarter results from the company. At constant currency, turnover rose 8.5 per cent to €3.3bn, while the overall seasonal first quarter loss has narrowed and management has reiterated its guidance for underlying operating profit growth of at least 10 per cent this year. Encouragingly, summer bookings are up 4 per cent with pricing up 5 per cent which, according to analysts at Panmure Gordon is a “solid position” for this time of year.
Pensions actuarial, consulting and administration provider Xafinity has announced its intention to float on the premium section of the London Stock Exchange. The company has already raised £180m from institutional investors for an offer price of 130p a share. However, it hopes to raise a further £46m in net proceeds from its listing. The offer price for retail investors has been set at 139p a share, giving the group a total market capitalisation of £190m. The entire net proceeds, together with the existing debt facilities, will be used to reduce the company’s existing debt, from £86m to £33m. Following the offer 45.8 per cent of the company will be held in public hands.
GlaxoSmithKline’s (GSK) new HIV drug has reported success at clinical trial. The drug Tivicay - which has been created by GSK’s ViiV joint venture - managed to suppress the virus to undetectable levels in 95 per cent of patients, when taken alongside Johnson & Johnson’s (JNJ) Edurant. Now the group will seek clinical approval for its drug in the US and Europe.
