Shares in animal genetics company, Genus, soared 15.5% today as analysts upgraded forecasts following today’s full year results.
Full year pre-tax profits fell 16% to £71.5mln on revenues of £593.4mln, up 3% on the previous year, reflecting challenging market conditions in its PIC China business.
Excluding PIC, group adjusted pre-tax profit rose 25% at constant currency and revenues were up 7%, the group said.
Broker Peel Hunt upgraded its rating on the company to buy from hold and increased its profit forecasts by around 5% to £80mln to reflect a strong underlying performance, improved visibility in China and currency benefit.
It said the shares have materially de-rated and there is effectively nothing in the valuation for the significant potential in gene editing, which is on-track for commercialisation in full year 2024.
11.30am: AB Foods tumbles after profits warning
Shares in Associated British Foods topped the FTSE 100 fallers, down 8%, after the group issued a profits warning today.
“Higher input costs, a decision not to push prices too far and lower consumer confidence are all going to weigh on Primark’s profits in the year to September 2023 and as a result, Associated British Foods is putting out a profit warning,” said AJ Bell investment director, Russ Mould.
Mould noted Primark now expects margins to be lower than 8%, well below the 10%-plus figure which has been the norm, and a big step down from the 11.6% achieved in the first half of this financial year.
Sales are still expected to rise due to already announced price increases and new store openings but Mould said “The retailer now expects the cost-of-living crisis and the huge knock to both consumers’ confidence and disposable income to limit volume growth.”
Unfavourable currency movements are a further complication, as Primark buys mainly in dollars and the greenback is rampant against the pound right now.
But management wants to limit further price rises to maintain its value credentials.
Mould said “This does, however, mean it will be much harder for the business to cope with the input cost increases it is seeing….and goes some way to explain the expected dip in the 2023 full-year profit margin to below 8%.”
Mould said in addition to inflation and higher input costs “the issues of supply chains and working conditions for staff in factories are not going away.”
10.45am: Darktrace slides as bid talks end
Shares in Darktrace PLC (LSE:DARK) (Darktrace PLC (LSE:DARK)) slid over 30% after news that Thoma Bravo had pulled out of talks aimed at making a bid for cybersecurity company.
Michael Hewson chief market analyst at CMC Markets UK said: “For the London market the news will be a mixed blessing as it will mean that we get to keep a tech success story, however on the flip side the shares have slipped sharply as the debate continues about its business model.”
“On the one hand it has been touted as an award-winning pioneer in the cyber-security space, a sector that is more important than ever in these testing times and the Russian invasion of Ukraine” Hewson said adding “On the flip side there are questions about its links with Autonomy owner Mike Lynch with some investors questioning how deep these links go.”
“There have also been questions about the amount of money the company spends on R&D, which it is being argued is too low for such an important sector” he said.
With the shares already well below their post IPO peaks of last year there is a sizeable split amongst investors as to whether the company can live up to expectations, Hewson added.
10.00am: Ocado boosted by Barclays upgrade
Ocado Group PLC (LSE:OCDO) (Ocado Group PLC (LSE:OCDO)) received a boost today as Barclays upgraded its rating on the company seeing the risks as more evenly balanced now.
Moving its rating to equal weight from underweight Barclays said “with retail sales set to improve, balance sheet concerns reduced for the time being and customer fulfilment centre deal flow expectations tempered, we think the balance of upside and downside risks is now more evenly poised.”
Barclays has a 775p per share valuation on Ocado.
Shares were trading 1.1% higher.