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PREVIEW: Insurance and travel the concerns at Moneysupermarket.com

Published: 18:30 19 Apr 2016 BST

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Shares in price comparison web site Moneysupermarket.com have stabilised after diving in January on concerns about the insurance side of the business.

An update at the beginning of March sang a familiar refrain of tough competition, but put a lot of minds at rest with full-year profits up 20% on the back of a 14% increase in revenue.

Peel Hunt said the key commentary in Wednesday's trading statement will be on the development of the insurance market, where revenues in the first two months of the year were down by around 4% year-on-year, and on travel, where performance was said to be “deteriorating”.

Revenue for the group as a whole in the first two months of 2016 was up 12%.

“Any further guidance on TV spend would be welcome and long-term capex is possible, but unlikely,” Peel Hunt suggested.

First quarter results from computer chip designer ARM Holdings may feel the impact of the slow-down in growth experienced by Apple in the final quarter of 2015, as ARM reports royalty revenue a quarter in arrears.

On the plus side, the slide in the value of sterling versus the greenback is a very handy bonus, as more than 95% of ARM's revenues are in US dollars.

Liberum, which rates the shares a 'sell', is forecasting a 13% increase in revenues in US dollar terms. The Processor Division's (PD) royalties are expected to be up 19% and licensing revenue up 9%.

Numis, in contrast, rates the shares a 'buy'.

“ARM last updated at the Q4/FY15 results on 10th Feb, which beat expectations due to strong licensing revenue and catch-up royalties offsetting a small miss on underlying royalty revenue. At this time, outlook was confident pointing to a 'robust opportunity pipeline' for licensing and indicating royalty growth was underpinned by increased royalty rates from chips based on ARM v8 which should ramp further in FY16. Despite a significant tailwind which has developed from the stronger US$, the consensus estimate for FY16E [earnings per share] has been stable at around 34.7p since the Q3 results in late October 2015, with a combination of conservative FX assumptions and cautious underlying growth forecasts (general macro uncertainty) keeping a lid on any upgrades,” Numis said.

“We expect ARM to report strong PD royalty growth at c23% YoY to $206m, which puts us ahead of consensus at $198m (consensus forecasts a lower than normal sequential growth, whereas we believe v8 is likely driving greater than normal sequential growth at present).

“We forecast 6% YoY growth in PD licensing to $116m, lower than consensus at $123m,” Numis continued.

“Forecasting licensing on a quarterly basis is difficult and this is the source of most upside and downside risk; however the confident tone set in February suggests bias of risk is to the upside,” Numis's Nick James ventured.


Significant announcements expected

Finals: N Brown Group (LON:BWNG)

Interims: ARM Holdings PLC (LON:ARM), Punch Taverns PLC (LON:PUB)

Trading statements: Evraz plc (LON:EVR), Hochschild Mining PLC (LON:HOC), Moneysupermarket.com Group PLC (LON:MONY), RELX PLC (LON:REL)

Economic: UK – Earnings, Unemployment. US – Existing Home Sales, Crude Oil Inventories


 

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