Shares in London began the week with small gains. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
As expected, rising competition in the medical devices market has weighed on ConvaTec (CTEC). Disappointing sales figures from newly launched products alongside supply issues in the advanced wound care and ostomy businesses have forced the group to lower revenue expectations for the year to December 2017. Management now also expects a reversal of the margin improvements obtained in the last 18 months. Shares fell by more than a fifth in early trading and we reiterate our sell recommendation.
Professional services company Charles Taylor (CTR) has refinanced its debt facilities on improved terms. The group now has a revolving credit facility of £70m and an accordion facility of £25m, up from £40m and £10m respectively. The improved facilities will mature in 2022, compared with 2018 previously. Buy.
Shares in Acal (ACL) were on the rise after the customised electronics specialist revealed it expects full-year earnings to be ahead of expectations after strong trading during the second quarter, which generated “good levels of organic growth”. Group orders increased by 15 per cent in the period under review, taking Acal’s forward order book to a period end high. Buy
Shares in Polymetal International (POLY) moved higher this morning, after a third quarter production report revealed a 26 per cent year-on-year uptick in output. The main contributor was a bump in gold from the Svetloye heap leach operations, which are now fully ramped up, and which keeps Polymetal on track for 1.4m ounces of gold equivalent for the full year. We remain buyers.
Shares in Low & Bonar (LWB) were marked down heavily after the industrial textiles specialist warned that ongoing problems at its civil engineering business are being compounded by rising raw material costs, partly linked to the hurricanes that caused severe damage in parts of the US and Caribbean. Management is reviewing what steps could be taken to mitigate problems in civil engineering, but the business isn’t expected to make a profit for the year as a whole. Under review
KEY STORIES:
Shares in both Genel Energy (GENL) and Gulf Keystone Petroleum (GKP) are both off 9 per cent this morning after Iraqi forces reportedly moved to take several oilfields in Kurdistan. Fears that the stand-off could spill over into conflict, which follows Kurdistan’s recent vote for independence, have also sent the oil price higher – as markets weigh the possibility of supply disruption.
Shares in support services group Interserve (IRV) dipped more than 5 per cent this morning after the company put out a brief statement confirming media speculation is was in “constructive and ongoing discussions with its lenders”. Management are working to provide an update on trading and the provisions against the energy from waste business, but clearly the market is bearish.
