Flurry of double-digit gains for UK shares on bumper results day
City writer Graeme Evans examines a handful of star performers among London-listed stocks as the Nikkei hits a record high and Nvidia sets US market alight.
22nd February 2024 15:56
by Graeme Evans from interactive investor
Rolls-Royce investors were not alone in toasting bumper results today after record figures sent shares in Morgan Sindall Group (LSE:MGNS) and the former Photo-Me business sharply higher.
Other big risers alongside Rolls-Royce Holdings (LSE:RR.) at the top of the FTSE 100 index included Beazley (LSE:BEZ), while drugs group Indivior Ordinary Share (LSE:INDV) led the FTSE 250 ahead of the vending firm ME Group International (LSE:MEGP).
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The flurry of near double-digit percentage gains came in an otherwise lacklustre session, with the London market unable to match excitement seen elsewhere after the Nikkei 225 stormed to a record high and NVIDIA Corp (NASDAQ:NVDA) shares jumped in early dealings on Wall Street.
In the FTSE 100, specialist insurer Beazley shares hit their highest level in almost a year after signalling a big return of capital due to a better-than-expected claims experience in 2023.
In a brief statement ahead of results on 7 March, the cyber protection and network security specialist tightened combined ratio guidance for the year to the mid-70 percent level.
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UBS said the improvement in the key industry benchmark from the low 80s implied a 30-40% upgrade to full-year earnings.
The plan to distribute about $300 million (£237.7 million), on top of the usual dividend, is well in excess of previous City expectations for a figure of $150 million (£118.8 million).
While UBS said the combined ratio gave room for an even greater distribution, it said that retaining a material amount of earnings was necessary to support the growth angle. Shares lifted 55p to 637p, which compares with UBS’s target of 750p before today.
The FTSE 250 was led by pharmaceuticals company Indivior, the former Reckitt Benckiser Group (LSE:RKT) arm best known for its Sublocade treatment for moderate to severe opioid use disorder.
Overall revenues rose 22% to $293 million (£232.1 million) in the fourth quarter, while Sublocade sales were at the top end of guidance for the year at $630 million (£499 million) following growth of 54% on 2022’s level.
The specialist in treatments for addiction and mental health illnesses forecast top line growth of 18% for this year and adjusted operating margin expansion of about 300 basis points.
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Shares jumped 235.3p to 1591.3p after the Virginia-based company also revealed it will consult shareholders over a potential switch of its primary listing to the US stock market. It intends to retain a secondary listing in the UK.
The next best stock in the FTSE 250 index was self-service vending machines business ME Group International, which jumped 12.4p to 145.2p after record results for 2023 included a 25.7% rise in pre-tax profits to £67.1 million.
The performance was driven by the expansion of laundry operations, while demand for photo-booth services benefited from relationships with governments and regulatory bodies for digital and secure photo ID.
The former Photo-Me International joined the stock market in 1962 and saw its valuation peak in 1999. It left the FTSE 250 in March 2006, with shares falling as low as 40p in the pandemic before a recovery led by long-serving chief executive Serge Crasnianski.
With the next-generation of photo booth being rolled out at pace, he said he expected the group to achieve continued revenue and earnings growth in 2024.
Analysts at Berenberg said ME’s 20% share price underperformance versus the FTSE 250 in the last six months looked unwarranted in light of the company’s strong operating performance.
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They have a price target of 200p, adding: “Shares are trading on just 5.4 times 2025 earnings, which we think offers an attractive entry point and plenty of scope for catch-up potential.”
Construction and regeneration group Morgan Sindall also reported record results, with a market-leading performance in the office fit-out division helping revenues up 14% to £4.1 billion.
Adjusted profits were 6% higher at £144.6 million, a result better than 2022’s milestone despite “market headwinds” and losses in the property services arm. The full-year dividend increased by 15% to 78p a share, resulting in a total of 114p.
Shares lifted 85p to near a two-year high of 2,300p but HSBC sees the potential for the mid-cap company to reach 2,575p after lifting its target price following the results.
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