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News & Tips: easyJet, Ferguson, Foxtons & more

Airlines run away with top blue-chip performances in morning trade
May 26, 2020

Travel & leisure companies were leading the charge today, with several posting double-digit percentage gains to top the index movers. Click here to read this morning's Market Outlook from Neil Wilson.

IC TIP UPDATES:

Ultra Electronics’ (ULE) Erapsco joint venture with Sparton has been awarded $205m (£168m) of subcontracts by the US Navy to manufacture sonobuoys. These are part of the five-year ‘indefinite delivery indefinite quantity’ (IDIQ) contract secured in August last year and are worth $102m to Ultra. Production is expected to be completed by March 2022. Buy.

Gateley (GTLY) says that despite Covid-19 disruption hitting the past two months of the year, revenue for the 12 months to 30 April will be at least £108m versus £103.5m a year earlier. Many of its counter-cyclical business lines such as restructuring and dispute resolution are “extremely busy” and it has been redeploying staff from transactional teams where there is less activity. The group has negotiated increased and extended working capital facilities of up to £20m as a pre-emptive measure, although it believes it should be able to withstand the financial impact of the pandemic. The full year results announcement has been delayed until September to allow the board time to assess the short to medium-term impact of this crisis more thoroughly. Buy.

Aston Martin (AML) has replaced chief executive Andy Palmer with Tobias Moers, who previously ran Mercedes-AMG. Aston shares rose 40 per cent in response to the announcement. Sell.

Kainos’ (KNOS) pre-tax profits climbed up by a tenth to £23.2m in 2020, with sales orders up by more than two-fifths to £243.6m. The software group maintains a strong contracted backlog of £180m, up 47 per cent from the year prior. Management anticipates that its customers in the public sector and in healthcare will prove to be more robust than those in other industries during the coronavirus crisis, although it has taken actions to reduce its cost base. The group has furloughed some staff, paused recruitment and pulled back all non-essential expenditure. Buy.

 

KEY STORIES: 

Foxtons (FOXT) has announced that it will start reopening branches from 1 June, after the government gave the go-ahead for property viewings to restart earlier this month. The estate agency group said commissions earned in the eight weeks between 23 March 2020 and 15 May were down 44 per cent on the same time the prior year, with sales commission suffering the worst reduction of 60 per cent, compared to a 41 per cent decline in lettings commission. 

 

OTHER COMPANY NEWS: 

Ferguson (FERG) has announced that chief financial officer Mike Powell has resigned in order to take up the same position at packaging group Mondi (MNDI). Mr Powell’s departure date has yet to be announced, although the search for his successor is underway.

Diversified Gas and Oil (DGOC) has quickly completed its $125m (£102m) acquisition of another suite of EQT gas assets in the Appalachian basin. The deal, announced earlier this month, will add around 9,000 barrels of oil equivalent per day (boepd) to DGO’s output, based on 2019 average production. The company has paid for the 900-odd wells through an $82m equity raise, with the rest covered by debt. DGO climbed 3 per cent in early trading on Tuesday. 

easyJet (EZJ) chief financial officer Andrew Findlay is to leave the airline in May 2021.

Marshall Motor Holdings (MMH) has opened its aftersales facilities to all customers, having previously only serviced key workers and the vulnerable during the coronavirus lockdown. It welcomed the news that car retail showrooms will be allowed to open on 1 June.