London's indices look set to end the week on a brighter note with the domestically-focused FTSE250 leading the way as investors respond positively to signs of compromise over a Brexit deal. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in WPP (WPP) were marked down this morning, after French advertising group Publicis reported a 2.7 per cent decline in third-quarter organic revenues – below its expectations. This was attributed to factors including higher-than-expected attrition in US traditional advertising, and softer performance in media operations (against a strong comparative). Publicis anticipates an organic net revenue decline of around 2.5 per cent for 2019, and a 30 basis-point margin improvement. Organic net revenues could decline by 2 per cent in 2020 if trends persist. Publicis had previously anticipated broadly stable organic net revenues, and a 30-50 basis-point operating margin increase. Still, WPP noted in a circular released earlier this week that “there has been no significant change to the current trading” since its August update. Buy.
Ideagen (IDEA) has bought Optima Diagnostics – a software-as-a-service company that developed ‘OSHENS’ (a SaaS-based health and safety compliance offering) – for £1.8m. Optima has around 80 customers across highly-regulated markets. At a current run-rate, it is generating around £1m in revenues (£0.9m of which is recurring) and cash profits of £0.1m. Buy.
Shares in Dart Group (DTG) were up 14 per cent in early trading after the company reported increased levels of customer demand since the collapse of Thomas Cook in late September. Management said the leisure business has continued to receive “encouraging levels” of later season bookings, with overall demand for both the flight-only and package holidays continuing to strengthen. The company now expects to exceed current market expectations for profit before foreign exchange revaluations and taxation for the year to March 2020. Our sell tip is under review.
KEY STORIES:
We may have been somewhat hasty in calling time on our sell call for Jupiter Fund Management (JUP). In the three months to September, the group saw a £1.3bn net outflow from its funds, outweighing a positive £496m movement across its portfolio. The majority of funds pulled were in Jupiter’s European Growth strategy, the management of which passed from outgoing star stock-picker Alexander Darwall at the start of this month.
The Financial Conduct Authority has fined TP ICAP (TCAP) £15.4m to settle charges that former managers in its interdealer broker arm, Tullett Prebon, failed “to act with due skill, care and diligence” with respect to an investigation into certain trades which took place between 2008 and 2011. The watchdog also found that “there were inadequate systems and controls in place to deal with the risk of improper broker conduct”, and that TP failed to discover and then disclose certain audio files pertinent to the investigation.
OTHER COMPANY NEWS:
Shares in listed hedge fund Man Group (EMG) are off this morning, after a trading update revealed a $1.7bn drop in funds under management in the three months to September. Positive investment movements of $0.7bn were offset by $1.1bn of net outflows and $1.3bn of negative foreign exchange swings. Chef executive Luke Ellis is “encouraged by our good performance fee earning potential”, but less bullish on the effect uncertain economic conditions are having on fund flows.
Self-storage outfit Big Yellow (BYG) has received planning permission for its new store in Hove, which will comprise 55,500 sq ft of net lettable space, and 4,700 sq ft of flexible office space. The site will be occupied until next summer, whereupon construction will begin – “with a view to the store opening in Spring 2022”.
Entertainment One (ETO) – which entered into an agreement on 22 August to be acquired by Hasbro for £3.3bn – has released its first-quarter numbers this morning. Revenues declined by 7 per cent to £173m, and underlying cash profits were down by 23 per cent to £13.4m – with the latter due partly to higher group costs (relating to corporate projects and legal fees). Net debt expanded from £342m as at March to £510m as at June. The completion of the Hasbro deal is subject to receipt of approvals. The annual general and special meeting of shareholders is scheduled for 17 October.
