Mounting fears of a trade tariff war have hit sentiment towards equities. Click here for The Trader Nicole Elliott's latest views on the markets.
IC TIP UPDATES:
Shares in Next (NXT) actually rose in early trading despite reporting figures from its “most challenging year in 25 years”. The face of retail is changing, but Next’s strategy to almost over-communicate its progress meant the market found few surprises in these numbers. Even better, the group’s statement marked one of very few chipper comments about the year ahead. If the group hits its mid-sales and profit growth targets (1 per cent and £705m) this year, then EPS should move ahead. We remain buyers.
Aviva (AV.) has decided to take no action to cancel its preference shares, following a slew of complaints from investors. Chief executive Mark Wilson said: “The reputation of Aviva, and the trust people have in us, is paramount. Our announcement today means that preference shareholders can rest secure in their holdings.” The insurer said the review of the preference shares was initiated “as a result of Aviva’s duty to examine what is right for the business, balancing the interests of ordinary shareholders and preference shareholders”. We remain buyers of the ordinary shares.
Shares in Sprue Aegis (SPRP) plummeted more than a quarter in early morning trading, after management revealed that it had received notice from BRK Brands - who it had entered into a three-year distribution agreement with in 2015 - that it is breach of certain provisions relating to its right to use BRK’s trademarks. BRK has terminated the distribution agreement. The group’s results, which had been due for release in late-March, have also been delayed until further notice. Management is seeking legal advice around the distribution agreement. We place our buy recommendation under review.
Primary Health Properties (PHP) is planning to raise at least £100m through a placing which will be open to new and existing retail and institutional shareholders. It will retain an option to increase this by as much as 25 per cent, depending on demand. The new shares will be available at 108p, a 5.3 per cent discount to the previous closing price. The funds will be used to finance property acquisitions and also to pay down debt. Buy.
KEY STORIES:
GlaxoSmithKline (GSK) has followed the lead Reckitt Benckiser (RB.) made yesterday and pulled out of the process of buying Pfizer’s consumer healthcare business. Investor’s relief that this potential purchase will not drain the company’s already dwindling cash resources, sent shares up 3 per cent in early trading.
Another patent issue, another share price fall for Indivior (INDV). Or, as broker Numis puts it, another buying opportunity. This time round, patent offices in the US have found that generic drug maker, Alvogen has not breached the group’s patent with the unbranded version of its major drug, Suboxone. Indivior says it will appeal the decision and although it can’t quantify the financial repercussions yet, management said launch of the rival product would be damaging to Suboxone’s sales.
OTHER COMPANY NEWS:
Shares in Fevertree (FEVR) are down more than 6 per cent this morning after the drinks company announced that 3m shares had been sold in a secondary placing at 2.750p each due to “significant institutional demand”. The shares were sold by Charles Rolls, one of the company’s founders and currently non-executive deputy chairman, though he'd originally intended to sell 1.5m shares.
Ryanair (RYA) has announced 15 new routes to Ukraine to begin flying in October this year. The budget airline is expecting the new routes will fly around 800,000 passengers to two major Ukraine airports. Shares fell more than 2 per cent in early trading.
