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News & Tips: Smith & Nephew, Funding Circle, JustEat & more

Continued political uncertainty has not cowed London-based investors
October 21, 2019

Shares across London's main indices are up despite the ongoing uncertainty provided by Brexit. Click here for The Trader Nicole Elliott's latest thoughts on the markets. 

IC TIP UPDATES: 

Shares in Smith and Nephew (SN.) were down around 8 per cent in early trading after the medical device group announced that chief executive Namal Nawana would be stepping down on 31 October “to pursue other opportunities outside of the UK”. 

Oxford Metrics (OMG) said that it enjoyed a “successful close” to its financial year ending September 2019, and it expects to report revenues in line with market expectations and adjusted pre-tax profits “broadly in-line”, because of the mix of revenues seen across its two divisions. The net cash balance at the period-end landed at £13.8m – up from £12.2m – after dividend payments totalling £3.1m during the year. The shares were down by around 3 per cent this morning. We remain positive; buy

Phoenix Global Resources (PGR) has announced the sale of a package of 70 per cent-owned Argentinian production blocks for $7m (£5.8m) and 39.7m shares in buyer Echo Energy (ECHO). Phoenix shareholders did not like the deal, with the company’s share price falling 13 per cent on the announcement. The oil and gas company said the Santa Cruz Sur assets were “non-core” as it was focused on its unconventional holdings in Argentina. The sale would see net current production 2,507 barrels of oil equivalent disappear from Phoenix’s portfolio. The Santa Cruz Sur operator and minority partner ROCH SA has to waive its right of first refusal for the deal to go through. Sell

Emis (EMIS) has announced that Emis Health has been awarded a place on the new NHS GP IT Futures framework, subject to the satisfactory completion of a customary 10-day standstill period. The new framework replaces GP Systems of Choice. It starts on 1 January 2020 and could run until 31 March 2023 (with a break option after the first year). All suppliers that have been appointed to the framework need separate approval for their products and services to be placed on the digital buying catalogue – an online platform through which clinical IT systems will be procured under GP IT Futures. Emis is at an advanced stage of this approval process. The shares were up 7 per cent this morning. Buy.

KEY STORIES: 

Capital and Counties (CAPC) is being eyed for a potential buyout by a consortium led by Candy Ventures, an investment vehicle of luxury property developer Nick Candy. The board of CapCo said it was in the early stages of considering an offer and advised shareholders to take no action. Management also said that it had entered into “a short period of exclusivity” with an entity established by UK property developer Delancey over the potential sale of its Earls Court scheme. 

Funding Circle (FCH) reported a 0.5 per cent decline in new loans written during the third quarter, but reiterated full-year performance guidance. Loans under management were up almost a third at £3.7bn compared with the same time the prior year, while the projected annualised return - after fees and bad debt - improved to 5-7 per cent in the UK for the year to date and to 5.7-7.8 per cent in the US. 

Shares in Just Eat (JE.) have fallen 6 per cent this morning after management said “softer consumer spending” and “changing consumer preferences” were slowing growth in its marketplace business. Sales were up 8 per cent in the UK in the third quarter of the year, compared with 11 per cent in the second. Broker Peel Hunt attributed the slowdown to growing competition from Uber and Deliveroo, as well as changing consumer preferences “guided by the increase in demand from the freshness of grocery delivery”. 

OTHER COMPANY NEWS

Nichols (NICL) has appointed David Rattigan as chief financial officer with effect from 24 February 2020. He will replace Tim Croston, who will step down from the board by 30 June 2020 after 15 years at the company. Mr Rattigan is currently interim chief financial officer at McBride (MCB) after having spent five years there as group financial controller. He has also held various roles at John Lewis Partnership, and was director of financial control at Premier Foods (PFD).

Bioventix (BVXP) has seen revenue rise by 6 per cent to £9.3m in 2019, with royalty and license fee income up 14 per cent to £6.3m. The most significant revenue stream remains the ‘vitD3.5H10’ antibody used to test for vitamin D deficiency – sales increased by 27 per cent to £4.3m during the year. Total troponin sales amounted to just £120,000, however the group believes these assays will generate significant value in the future. With research and development costs jumping by 29 per cent to £1.1m, pre-tax profit has grown by just 1 per cent to £7m. Shares are down 3 per cent this morning.