Biggest fallers: Ricardo, Wizz Air and Indivior

A trio of stocks have taken a pasting this session, but should investors have a nibble or steer clear? Graeme Evans discusses price potentials. 

Brexit, air traffic controllers and a rival pharmaceuticals company were among the external forces depressing shares in Ricardo, Wizz Air Holdings and Indivior today.

The challenge now for investors will be to judge whether these one-off factors present an opportunity to jump on board at cheaper share prices.

Certainly, FTSE 250 stock Wizz Air looks an interesting bet after "unprecedented disruption" from European air traffic control issues caused first quarter flight cancellations to jump to 145 from 34 a year earlier.

Passenger delay and compensation costs incurred by the airline also increased by 203% to more than 9 million euros. As the problems are likely to continue into the autumn, and with a continued rise in fuel prices, Wizz has taken the decision to trim its full-year capacity growth target from 20% to 18%.

Source: interactive investor      Past performance is not a guide to future performance

However, Wizz remains confident in delivering profits of between 310 million and 340 million euros, helped by recent double-digit growth in passenger numbers and revenues.

The budget carrier, which serves central and eastern European markets, has produced some stunning growth since joining the stock market with a value of just over £600 million in February 2015. 

It is now worth £2.5 billion, having recently signalled its ambition with a deal to buy 146 Airbus aircraft. Wizz has also bolstered its presence at Luton airport with the purchase of slots previously held by collapsed airline Monarch.

Despite today's caution, Barclays and Societe Generale are both relaxed about the company’s ability to ride out the current disruption, with price targets of 4080p and 4500p respectively.

SocGen called the first quarter performance a "solid update in a very difficult environment", while Barclays said the withdrawal of competitor capacity in the face of rising oil prices could be a source of upside.

For engineering and environmental consultancy Ricardo, today’s share price weakness was caused by a trading update highlighting the impact of Brexit on its Europe, Middle East and Africa automotive business.

The company, whose client list includes Audi, Bugatti and Aston Martin, reported a low level of UK orders for the division in the second half of its financial year through to June 30. Assuming that UK market conditions remain as they are, the company is planning for revenues growth of 3% to 5% in the year ahead.

Source: interactive investor      Past performance is not a guide to future performance

Other parts of the business, including automotive in Asia, continue to perform well and chief executive Dave Shemmans pointed out that the West Sussex-based company entered the new financial year in good shape.

Shares rose 48% between last August and June’s 1,050p record high but have retreated to 838p since then, including today’s 10% decline.

The recent rollercoaster ride for Indivior investors has been caused by competition from Dr Reddy’s after the Indian firm was able to sell a copycat product before a restraining order was granted by a US court.

Having warned previously that the resulting 2018 revenues impact on blockbuster opioid addiction treatment Suboxone Film would be around $25 million, Indivior now thinks the figure could be materially higher.    

Given this ongoing uncertainty, Indivior continues to be unable to offer guidance on full-year profits. Net income for the quarter to June was down 21% today.

Shares rose to 490p in June but have lost 40% of their value since then, with analysts also disappointed at initial sales of Sublocade, the company’s new injectable version for moderate-to-severe opioid use disorder.

Source: interactive investor      Past performance is not a guide to future performance