News & Tips: Gulf Keystone, Balfour Beatty, Wm Morrison, Rightmove, SuperGroup, BTG, Spirent & more

Equities have experienced a minor bounce this morning after yesterday’s sharp falls, and The Trader Dominic Picarda is not giving up on the bull market just yet.


Gulf Keystone Petroleum (GKP) has formally announced an oil discovery at its Sheikh Adi-2 exploration well in Kurdistan. This is adjacent to its potentially huge Shaikan discovery and in early flow testing has produced 4,235 barrels of oil a day. Buy.

Construction and support services specialist Balfour Beatty (BBY) has surprised investors with a profit warning. Weak construction markets in the US and UK have contributed to a decline in the order book from £15bn to £14.4bn in the three months from June to September. Our rating is under review.

Supermarkets group Morrison’s (MRW) figures for the third quarter reflect the tough consumer environment with total sales down by 0.4 per cent in the period and like for like sales 2.1 per cent worse.

Tate & Lyle (TATE) has announced a 7 per cent uplift in sales in the six months to September and a 2 per cent rise in adjusted operating profits. We keep our buy rating.

Dairy Crest (DCG) issued interim results which reflect the sale of its St Hubert business, which helped to slash debt from £365m to £76m. But revenues dipped by 7 per cent and adjusted profits by 16 per cent. The strategic focus on core brands appears to be working, with the four key brands exhibiting double digit growth. Buy.

Mears Group (MER) has announced solid trading in the period from 1 July. Its order book stands at £2.6bn, with 99 per cent of full year forecast revenues already secured and 86 per cent of 2013 revenues also booked. The company has separately announced the acquisition of Morrison Facilities Services for £24m. We keep our buy recommendation.

Sell recommendationElectrocomponents (ECM) has reported flat underlying earnings and a 30 per cent slide in headline profits amid tough trading conditions.

Engineering consultancy Ricardo (RCDO) has announced the intended acquisition of certain parts of the AEA Technology (AAT) business, which was placed into administration this morning. We keep our buy rating on Ricardo.

Simon Thompson recommendationTrading Emissions (TRE) has updated investors on its latest valuation as the company continues to pursue a policy of liquidating its assets. The company has been valued at 62.98p a share, of which 24.42p is cash.

The board of Aviva (AV.) has confirmed its quest for a new chief executive remains on track as does its process of streamlining the business through disposals of non-core elements. Buy.

RSA Insurance Group (RSA) has reported 4 per cent premium growth in the nine months to September and confirmed its guidance for a combined ratio of at least 96 per cent and investment income of £500m for the full year. We maintain our buy recommendation.


Rightmove’s (RMV) strong interim management statement today was accompanied by news of chief executive Ed Williams’ intention to step down next April. He will be replaced by finance director and chief operating officer Nick McKittrick.

Retailer SuperGroup (SGP) has reported a 16 per cent rise in total sales in the half year to 28 October and 5.5 per cent like for like sales growth in the UK business in the past quarter, although this is against a weak -3.3 per cent performance last year.

Animal breeding and genetic improvement specialist Genus (GNS) has announced that recent trading is ahead of the strong performance reported at this point last year.

Biotech business BTG (BTG) has announced a 30 per cent hike in revenues in the six months to September and a 44 per cent rise in pre-tax profits to £18.3m.

JD Wetherspoon (JDW) enjoyed a 7.1 per cent uplift in sales over the three months to 28 October, boosted by the Olympic effect. Management does not expect this level of sales growth to continue.


Micro Focus (MCRO) says performance is in line with expectations with licence and maintenance revenues running ahead of expectations but consultancy income behind expectations.

Spirent Communications (SPT) has said that trading in the third quarter has been challenging and customers continue to exercise caution in their investment decisions.


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