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News & tips: Apple, Lloyds, Vodafone & more

Oil and iPhones weigh on investor sentiment, while European central bankers defend their actions
October 26, 2016

Drooping oil prices and disappointing earnings from Apple and others weighed on early trading in the UK. Amid growing scepticism, Mario Draghi - President of the European Central Bank (ECB) - continues to preach the benefits of monetary policy. Read The Trader Nicole Elliott's morning update here.

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Telecoms regulator Ofcom has fined Vodafone (VOD) just over £4.6m, its largest single fine ever, for “serious and sustained breaches of consumer protection rules”. Investigators found that the FTSE 100 mobile telecoms giant failed to credit the accounts of nearly 10,500 customers when they ‘topped up’ their mobile phone credit, translating into losses of £150,000 over 17 months. The issues stemmed from the transition to a new billing system. The regulator also found that Vodafone’s customer service agents weren’t given sufficient guidance about how to handle complaints, and issues weren’t resolved in a fair and timely manner.

Lloyds (LLOY) booked a further £1bn in provisions for mis-selling payment protection insurance during the three months to the end of September. This was up from £0.5bn the same time last year, which meant pre-tax profits decreased by 15 per cent to £811m for the three months. The banking group managed to reduce its operating costs by 2 per cent, while its net interest margin increased five basis points to 2.69 per cent. We’re sticking with a buy for now.

AstraZeneca’s (AZN) pivotal trial into its cancer drug Lynparza has generated positive results. Earlier in the year the drug was fast-tracked by the US Food and Drug Administration (FDA) for use in patients with a specific genetic mutation in ovarian cancer. Lynparza has been tipped to be one of Astra’s top-selling cancer drugs. Buy

Revenues and net income fell at Apple (US:AAPL) in the fourth quarter to 30 September, as sales of the tech giant's flagship iPhone fell 13 per cent to about $28.2bn (£23.1bn). The company sold fewer iPhones, iPads and Mac computers, but services revenue leapt 24 per cent. Under review.

OptiBiotix (OPTI) shares rose 2 per cent in early trading after the group provided the market with a scientific and commercial update. Opti’s microbiome modulators have successfully altered the human microbiome which could lead to big health benefits including lowering patients' cholesterol. Management believes that Opti is the first company to demonstrate such findings. They also point to a recent deal in which a single microbial strain was bought for £82m, which demonstrates the commercial potential in the microbiome space. Buy.

Despite a strong quarter – and its Antucoya mine reaching nameplate capacity – copper miner Antofagasta (ANTO) this morning told the market that full-year production is likely to be at the lower end of its original guidance for 710,000 to 740,000 tonnes of ore. Given the higher market hopes, shares in the miner were down 7 per cent in early trading, though we remain long-term buyers.

Shares in Earthport (EPO) dipped about 2 per cent in early trading after the cross-border payments specialist revealed sales growth of 18 per cent and a gross profit of £15.3m in the year to 30 June. In the first quarter of this financial year, payment volumes more than doubled year on year. Under review.

Keywords Studios (KWS) has agreed to purchase Player Research for up to £1.3m, bolstering the video game services group’s consulting and user testing segments. Management expects the deal to immediately lift earnings. Buy.

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Metro Bank (MTO) continued its rapid growth in customer loans and deposits during the third quarter of the year. Customer loans were up three-quarters to £5.2bn, while the loan-to-deposit ratio increased to 71 per cent. Around 68,000 new customers were added, taking the total to 848,000. The challenger bank incurred £0.7m in lag effect from the reduction in interest rates, yet pre-tax losses improved to £0.4m, from £10.7m the previous year.

CYBG (CYBG) has confirmed it is in talks to bid for Royal Bank of Scotland’s (RBS) Williams & Glyn. RBS is meant to divest of the 300-branch business by the end of next year under EU rules for receiving a £45bn bail-out during the financial crisis.

Weaker sterling meant revenues for Bunzl (BNZL) were flat during the third quarter compared with the previous year. However, at constant rates revenue increased 7 per cent, 3 per cent of which was thanks to acquisitions made previously. The support services group bought another three companies in the UK, Ireland and Czech Republic during the period.

OTHER COMPANY NEWS:

An 8 per cent fall in quarter-on-quarter production wiped a tenth off shares in Genel Energy (GENL) this morning. The Kurdistan driller now expects output levels to sit at the lower end of the 53,000 to 60,000 barrels per day target range, and full-year revenue closer to $200m.