Proactive Investors -
- FTSE 100 down 10 points at 7,665
- Inflation unchanged in September at 6.7%
- Whitbread (LON:WTB) jumps after strong results
Upgrades to follow strong Whitbread results
Whitbread’s results have gone down well in the City with shares top of the FTSE 100 risers, up 3.7%.
Jefferies said the results were “strong” with sales a 1.4% beat and adjusted pre-tax profit a 14.5% beat against consensus.
It thinks the further £300 million of buybacks announced this morning should be taken well and it estimates a 10-11% upgrade to financial 2024 EPS forecasts today.
It highlighted current trading appears strong with the 6 weeks to 12 October growing 12% in the UK with the only negative some softness in the German market over the summer.
“We see re-rating potential from a stronger business model, benign supply conditions and greater reinvestment potential vs history. We also see scope for further earnings momentum in the year” Jefferies said.
It reiterated its buy rating.
As we reported earlier Shore Capital was also upbeat on Whitbread, reiterating a buy rating.
“We continue to see such valuation as too low given the robust trading, leading market position, freehold rich and debt-free estate, attractive return metrics and medium-term opportunities,” the broker said.
It said the better than expected profit was driven by the UK (up £90 million), reduced German losses (£11 million) and net interest income (£24 million).
It also sees scope for further buy-backs of more than £1 billion over the medium term.
Peel Hunt (LON:PEEL) is also a buyer with a 4,000p price target.
“While there are clearly concerns over this cyclical business for FY25E and beyond, we can see the scope for upgrades for this year as competitors come under further pressure,” it said.
Kin & Carta soars on £203 million takeover
Other stocks on the move include Kin & Carta which is up 41% after agreeing to a £203 million takeover offer from from private-equity firm Apax.
The bid values each share of the software consultant at 110p.
Marshalls is also in the green, up 7.4%, after it said trading has remained in line with its expectations.
Peel Hunt noted the shares “have dropped c.25% in the last month on fears that forecasts would be cut further but this update should reassure as we see no change to forecasts post this update.”
The update follows warnings from builders’ merchants like Travis Perkins (LSE:LON:TPK) and SIG (LON:SHI).
“We retain our 310p price target and believe the recent sell off represents a great 2-3 year buying opportunity,” the broker said.
Adidas gives JD Sports a lift
The FTSE 100 remains in the red, now down 27 points, at 7,648.
Top of the risers is Whitbread, up 3.7%, as its market beating results, bumper dividend and fresh share buy-back.
Following closely behind is JD Sports Fashion PLC (LON:JD.), up 1.5%, on a positive read across from adidas (ETR:ADSGN), which is up 3.7% in Frankfurt after the sports retailer raised guidance for the year in results announced after the market close Tuesday.
The rising oil price has lifted BP (LON:BP), up 0.5%, and Shell (LON:RDSa), up 0.2% but it is not such a good morning for housebuilders after Barratt Developments (LON:BDEV) downbeat trading update.
Barratt said the “outlook for the year remains uncertain with the availability and pricing of mortgages critical to the long-term health of the UK housing market.”
Shares are down 1.9%, with Taylor Wimpey (LON:TW), down 1.6%, and Berkeley Group PLC (LON:BKGH) down 1.5%.
The stubborn inflation figures are also adding to pressure on the sector with the possibility of another interest rate increase likely to keep the pressure on mortgage rates.