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News & Tips: Abcam, Wizz Air, Interserve & more

Equities are holding steady despite uncertainty over the Italian election result.
March 5, 2018

An uncertain result from the Italian election with populists holding sway has not troubled equity markets. Click here for The Trader Nicole Elliott's latest thoughts. 

IC TIP UPDATES:

Interim results from antibody specialists, Abcam’s (ABC) as impressive as ever. The group has reported double digit constant currency revenue growth, characteristically high gross margins and a 20 per cent leap in adjusted EPS. News that the group’s new cloud technology system has fallen behind schedule spooked investors in early trading, but the share price had recovered within a few hours. What investors must now decide, is whether recent share price growth offers an opportunity to bank some profits. We place our buy recommendation under review.

Passenger numbers at Wizz Air (WIZZ) were up by nearly a quarter during February to 2.1m, though load factor fell 0.7 percentage points to 91.2 per cent. The budget airline has increased its capacity by 22.2 per cent over the past 12 months with more routes in Romania and Poland and a new base at London Luton airport. Shares fell just over 1 per cent in early trading. Buy.

Shares in Interserve (IRV) rallied this morning following news reports over the weekend saying the outsourcer was planning further job cuts. A report in the Financial Times said the board was planning a further 1,000 job cuts by the end of 2018, to follow the 500 cut over the last quarter. The shares were up 6 per cent in early trading, but are still down considerably on our sell tip. Sell.

GVC Holdings (GVC) announced that it will buy a majority stake in Mars LLC, better known as Crystalbet, for €41.3m (£36.8m) with the intention to buy up all the remaining shares in 2021. Crystalbet launched in 2011 and has become one of the leading online gaming operators in the Republic of Georgia. Management at GVC think they can improve the profitability of Crystalbet and its market share, and fits with GVC’s strategy to focus its expansion on regulated market. Shares fell 1 per cent in early trading. Buy.

KEY STORIES:

Supermarket chain Tesco (TSCO) and wholesaler Booker (BOK) have completed their merger. After working on the deal for nearly a year, the transaction won court approval last week and, effective today, former Booker boss Charles Wilson is the new chief executive of Tesco's retail and wholesale operations in the UK & Ireland.

OTHER COMPANY NEWS:

SOCO International (SIA) has terminated discussions with Kuwait Energy, first announced at the beginning of January, regarding a potential merger. The group cited an inability to reach agreement “on the basis for an acceptable transaction” with Kuwait, which attempted to list in London last year.

Paddy Power Betfair (PPB) chief financial officer Alex Gersh intends to step down after six years at the bookie once a replacement has been found. The board is now in the process of finding a replacement. Shares fell 1 per cent in early trading.

Ryanair (RYA) carried 5 per cent more passengers during February at 8.6m, up from 8.2m the same month in 2017, with load factor flat at 95 per cent. Over the past 12 months traffic has grown 9 per cent to 130m customers. Shares were up more than 2 per cent in early trading.

For Zoo Digital (ZOO) - the provider of localisation services for the global entertainment industry - full-year revenue is expected to be at least $28m for the 12 months to 31 March. This is up substantially from $16.5m a year earlier. Adjusted cash profits are expected to beat market expectations, reaching at least $2.3m - up from $1.8m. The group has continued to invest in its proprietary cloud-based platform. Shares were up 11 per cent this morning.

Telit Communications (TCM) has appointed Miriam Greenwood and Shlomo Liran as non-executive directors with immediate effect. Ms Greenwood is a barrister and has spent over 30 years at leading banks and financial institutions. Among other companies, Mr Liran has been chief executive at Ericsson Israel and the Swedish and Danish mobile operator TRE. Telit’s shares were up 3 per cent this morning.