Rolls-Royce Shares Could Remain Volatile
1000 GMT - Rolls-Royce shares could remain volatile after Hong Kong airline Cathy Pacific found a fault with its Airbus engines, AJ Bell analyst Russ Mould says in a research note. Shares in the engineering group fell on Monday following the news, but bounced back in early trading on Tuesday. "That rebound isn't guaranteed to last, particularly as there is still a lack of detailed information on the incident and how many other engines might be affected," he adds. Another scandal could scupper Rolls-Royce's recovery efforts and investors will keep their fingers crossed that this incident is an isolated one, Bell says. The situation is still fluid, so shareholders need to brace themselves for more share price volatility, he adds. Shares trade 3.3% higher at 479.50 pence. (nina.kienle@wsj.com)
COMPANIES NEWS:
Watches of Switzerland Confirms Financial Targets After Current Trading Matches Expectations
Watches of Switzerland Group said it is on track to deliver its targets for fiscal 2025 as trading during the first 18 weeks was in line with the company's expectations.
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STV Group Swings to Pretax Profit After Growth Strategy Boosts Revenue
STV Group reported a swing to pretax profit and double-digit revenue growth for the first half of the year as its growth strategy continues to deliver.
MARKET TALK:
Ashtead's Reliance on American Mega Projects Might Hurt Growth Targets
0926 GMT - Ashtead Group's reliance on U.S. mega projects might cause concern as these are linked to current president Joe Biden's infrastructure program, which Donald Trump might seek to unwind if he wins November's election, AJ Bell analyst Russ Mould says in a note. This in turn would lead to greater reliance on local commercial construction markets which are seeing lower levels of activity as the U.S. economy slows, and might make it more difficult to achieve its ambitious growth targets, which are associated with Ashtead's Sunbelt 4.0 five-year strategic plan, Mould says. Although increasing the volume of locations into a market-experiencing headwinds could leave it exposed, an expanding footprint in 'speciality' rentals would add some useful diversification, he says. Shares are up 3.7% at 5,556 pence.(anthony.orunagoriainoff@dowjones.com)
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Ashtead Group Seen Benefiting From Longer-Term Growth Despite Fragmented U.S. Market
0924 GMT - Equipment-rental company Ashtead presents a persuasive case over its business being materially more resilient than in previous downturns as rental revenue grew 7% in the U.S. and Ebitda of $1.29 billion was ahead of consensus, RBC Capital Markets analysts Karl Green and Andrew Brooke say in a note. Still, analysts remain cautious around the wider industry's near-term outlook as interest rates remain higher for longer and the associated risk of growing pockets of overcapacity across the industry's fleet at a national level remains. "We continue to see Ashtead as a very well-managed, multi-year compounder with credible medium-term targets and a long runway for longer-term growth in what remains a very fragmented core U.S. rental equipment market," they say. Shares are up 4.7% at 5,610 pence. (anthony.orunagoriainoff@dowjones.com)
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Ashtead's New CFO May Precipitate Move to U.S. Listing
0854 GMT - Ashtead Group named a successor to CFO Michael Pratt--who will retire next September--which could accelerate a move to a U.S. listing and away from London's FTSE 100 index, Jefferies analysts Allen Wells and Ryan Flight say in a note. Incoming CFO Alex Pease will join the company in October from WestRock, a paper and packaging solutions company, where he served as CFO until its recent merger with Smurfit Kappa. Shares are up 3.7% at 5,554 pence. (anthony.orunagoriainoff@dowjones.com)
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Ashtead Stays Put in London for Now Despite U.S. Listing Speculation
0846 GMT - Ashtead Group is at the center of speculation over switching its listing from London to the U.S., where the vast majority of its revenue and profits are derived, Interactive Investor analyst Richard Hunter says in a note. Although the equipment-rental company maintains that it regularly reviews its capital structure--including its listing's domicile--it remains on the FTSE 100 for the moment, thus avoiding another blow to a premier index that has seen a slow exodus of major corporates, he says. Its presence and strength in the world's major economy keeps growth prospects firmly intact, and the market consensus of the shares as a buy is likely to be consolidated further given the warm share-price reaction to its 1Q update, he says. Shares are up 3.3% at 5,536 pence.(anthony.orunagoriainoff@dowjones.com)
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Gilt Yields Edge Lower Ahead of U.S. ISM Manufacturing Data
0823 GMT - Gilt yields edge lower ahead of the release of the U.S. Institute for Supply Management (ISM) manufacturing index data at 1400 GMT. Market reaction to the data is likely to be muted as investors await the all-important U.S. non-farm payrolls data due on Friday, Mizuho rates strategist Evelyne Gomez-Liechti says in a note. The 10-year gilt yield and the 2-year gilt yield each fall around 2 basis points to 4.037% and 4.105% respectively, Tradeweb data show. (miriam.mukuru@wsj.com)
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Watches of Switzerland Group Reassures Investors
0814 GMT - Watches of Switzerland Group had a rather complex period in its last fiscal year, with earnings misses and particularly weak luxury demand in the U.K., Shore Capital analysts write in a note. The London-based luxury watch retailer said trading during the first 18 weeks was in line with the company's expectations, which should reassure investors given recent woes, they add. "Watches [of Switzerland] is a well-operated firm with a strong balance sheet and immense retailing capability," the analysts say, adding that the company should be able to gain market share in both the U.S. and the U.K. Shares trade 9.3% higher at 411 pence. (andrea.figueras@wsj.com)
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Watches of Switzerland Group Gives Investors Some Relief
0748 GMT - Watches of Switzerland Group's reiterated guidance provides some relief, at a time when the luxury watch category is in a cyclical downturn, RBC Capital Markets analysts Piral Dadhania and Richard Chamberlain write in a note. The luxury watch retailer confirmed its outlook for fiscal 2025, with revenue expected between 1.67 billion pounds and 1.73 billion pounds and growth of between 9% and 12% at constant currency. The adjusted EBIT margin should expand from 20 to 60 basis points from fiscal 2024. "We believe this should provide some reassurance, given some concerns heading into the print of a potential guidance cut," they say. Current trading was in line with its estimates, which is a small step towards rebuilding credibility, they add. Shares trade 10% higher at 414.80 pence. (andrea.figueras@wsj.com)
Contact: London NewsPlus, Dow Jones Newswires; Dow Jones Newswires; paul.larkins@wsj.com
(END) Dow Jones Newswires
September 03, 2024 06:07 ET (10:07 GMT)
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