Proactive Investors -
- FTSE 100 advances, heading back towards 8,000
- ARM confirms plans to list in the US, shuns London
- Energy guarantee scheme to be extended - The Times
PPHE flies as Jefferies upgrades to buy
Shares in PPHE Hotel Group Limited shot higher after Jefferies put the stock on its buy list with a £16 price target.
“We see a disconnect between PPHE's share price and fundamental performance,” the broker said.
It pointed out shares in the international hospitality real estate group have fallen 6% in the past three months while the wider sector has risen between 15% to 23%.
It felt this underperformance was unjustified given PPHE has seen continued demand strength in January and February and forward bookings growth for 2023. Guidance for sales and EBITDA growth is in line with peers, Jefferies noted.
Jefferies sees greater scope for recovery in 2023 than its peers given its prime city centre locations are well-positioned to capture the recovery and the partnership with Jin Jiang gives unique access to the Chinese consumer.
It also thinks leverage should come to down 7.6x net debt/NOI from the current 8.4x.
The broker raised fiscal year 2023 sales/EBITDA/EPS forecasts by 16%/25%/104% respectively, driven by a stronger recovery, operating leverage and financial leverage.
Shares in PPHE soared 7% to 1,241p in London on Friday. FTSE 100 is steady at 7,960.47, up 16.43 points, or 0.21%.
Pennon shares advance on Deutsche upgrade
Shares in Pennon PLC flowed higher as Deutsche Bank took the water utility company off its sell list.
The German bank downgraded the stock to sell from hold six weeks ago but now feels environmental risks are reflected in the share price.
At the time Deutsche had concerns about its environmental performance, in particular around the ongoing Ofwat investigation.
It felt that the risks were not reflected in the stock price, particularly given that it felt the valuation of the shares required Pennon to restore its strong spending outperformance.
“It appeared that the company may come under pressure to increase spending, which could limit its ability to step back up its cost savings.”
However, after the recent share price decline the broker has taken a more positive view
Pennon’s share price has fallen 10% year to date but is up 1.9% today at 820p. Despite the upgrade in rating Deutsche trimmed its price target to 840p from 870p.
Meanwhile the FTSE 100 has paused for breath at 7,956.95, up 12.91 points, or 0.16%.
Energy guarantee scheme to be extended - The Times
The chancellor Jeremy Hunt is poised to extend the £2,500 energy price guarantee for another three months according to The Times.
The report cited Whitehall source as saying it will act as a 'bridge' until wholesale prices fall below energy price cap in July. The cost is estimated at £3bn but could be less, the report said.
EXCLUSIVE:Jeremy Hunt poised to extend £2,500 energy price guarantee for another three months
Whitehall source says it will act as a 'bridge' until wholesale prices fall below energy price cap in July
Cost estimated at £3bn but could be lesshttps://t.co/QiDxkCBrOU
— Steven Swinford (@Steven_Swinford) March 3, 2023
UK's service sector returns to growth
The UK's service sector returned to growth in February as business activity expands at fastest pace since June 2022, according to the S&P Global/CIPS services PMI report.
At 53.5 in February, up from 48.7 in January, the headline index was above the 50.0 no-change value for the first time in six months with February's data indicating that the UK service sector gained considerable momentum, with business activity and incoming new work both expanding for the first time since August 2022.
Tim Moore, economics director at S&P Global Market Intelligence said: "UK service providers moved back into expansion mode in February as fading recession fears and improving business confidence resulted in the strongest rise in new orders since May 2022."
????????The #UK service sector gained considerable momentum, with business activity and incoming new work both expanding for the first time since August 2022 (headline #PMI at 53.5; Jan: 48.7). Input cost inflation fell to its lowest since June 2021. Read more: https://t.co/dyrtXAp4VT pic.twitter.com/EdkXaHM75y— S&P Global PMI™ (@SPGlobalPMI) March 3, 2023
Mirroring the trend for business activity, service providers indicated that volumes of new work returned to expansion territory during February.
Measured overall, the rate of new business expansion was the strongest since May 2022. Rising export sales contributed to the rebound in total new orders in February.
Higher levels of new work from abroad have been recorded for three months running, with the pace of expansion accelerating throughout this period. Service sector companies often noted stronger demand from clients in the US and western Europe. A modest rise in employment numbers was reported.
Average prices charged by service providers continued to rise sharply in February, and the rate of inflation slowed to a much lesser extent than seen for input costs.
The news supported the FTSE 100 which is just off session highs at 7,961.06, up 17.02 points.