FTSE 250 round-up: pubs and airlines on the move

The gains are small in the context of a grim year, but this week’s upward moves in the FTSE 250 at least bring some hope for mid-cap investors.

Bargain hunters have continued to sweep up heavily sold UK stocks after the likes of Mitchells & Butlers (LSE:MAB) and Moonpig Group Ordinary Shares (LSE:MOON) took their share price gains since Tuesday to over 10%.

Other stocks in the FTSE 250 on the front foot over recent days have included the retail shopping centre landlord Hammerson (LSE:HMSO) and London offices business Workspace Group (LSE:WKP).

Interest has been fuelled by calmer conditions in financial markets, which have resulted in the pound trading at its highest level since before the unfunded tax cuts in the mini-budget.

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Europe’s milder-than-usual start to the winter has lowered wholesale gas prices, potentially softening the margins hit from future energy bills. 

There was also encouragement for consumer-focused stocks today as the latest CBI distributive trades survey showed the retail sales balance improved in October. 

The FTSE 250 index was below its opening mark today, but 3.5% higher than Tuesday and at its highest level since mid-September. However, the share price gains seen this week remain small in the context of a gruelling year for mid-cap investors.

Pubs chain Mitchells & Butlers is still more than 55% lower in the year-to-date at 114.5p, but analysts at Deutsche Bank said today they think the sell-off is overdone.

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Their review of forecasts for the industry reflects expectations for a “lost year“ as demand comes under severe pressure. With little leeway on costs, operating profits are vulnerable to further downside but the bank said it is not time to cut exposure.

Deutsche Bank lowered its price target for Mitchells to 213p from 230p and also has a “buy” recommendation on Wetherspoon (J D) (LSE:JDW) despite lowering its estimate to 630p from 735p. JD was today at 454.8p after a rise of 2p.

Other big movers in the FTSE 250 include Wizz Air (LSE:WIZZ), which has jumped more than 20% in the space of two days. Luton-based carrier easyJet (LSE:EZJ) is also up 11% after sentiment was boosted by yesterday’s operating figures from Heathrow.

About 5.8 million passengers used the airport in September, which is only 15% below 2019 levels and the highest since the start of the pandemic. Total passenger numbers are expected to top 60 million this year, which is about a quarter lower than 2019.

Among those FTSE 250 companies reporting today, drugs firm Indivior Ordinary Share (LSE:INDV) consolidated recent momentum for its shares by reporting a stronger outlook for Sublocade, which is its flagship treatment for moderate to severe opioid use disorder.

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Overall revenues in the third quarter rose 24%, with the company now pointing to a top line figure for the year of between $890 million and $915 million, up from $840 million to $900 million previously. Adjusted operating profit should be modestly higher than 2021.

Shares rose 4% before falling back to stand 13p cheaper at 1,594p.

Meanwhile, Renishaw (LSE:RSW) shares fell 118p to 3,596p after a strong start to the financial year at the manufacturing technologies business was clouded by weakening order intake from the semiconductor and electronics sectors.

First-quarter revenues were 14% higher at £179.9 million but adjusted profits fell 4% to £40 million. Renishaw said the uncertain outlook meant it was managing costs carefully and focusing on productivity,

Broker Peel Hunt today retained its “hold” recommendation and 3,600p price target, noting that shares are trading on 19.2 times forecast 2023 earnings.