FTSE 250 round-up: PZ Cussons, Oxford Instruments, Darktrace
13th April 2023 15:06
by Graeme Evans from interactive investor
In a lacklustre session for the FTSE 250 index, these three mid-caps have caught the eye with robust trading updates. Our City expert finds out more.
Mid-cap stocks PZ Cussons (LSE:PZC) and Oxford Instruments (LSE:OXIG) kept up their recent momentum today as they joined the cybersecurity firm Darktrace (LSE:DARK) in delivering reassuring updates.
Manchester-based Cussons, the maker of hygiene and beauty brands including Carex, St Tropez and Imperial Leather, rose 8.8p to 196p as it continued the fightback seen since a punishing market reaction to disappointing half-year results in February.
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The FTSE 250 stock has rebounded 14% in less than a month, with today’s rise reflecting a sixth consecutive quarter of revenues growth and unchanged full-year expectations.
Significantly, Cussons revealed much stronger trading in Europe & the Americas after the performance of this division was blamed for the earnings miss in February.
The region recorded like-for-like growth of 9.9% in the three months to 4 March, a level that slimmed the decline for the year to date to 1.2%. Chief executive Jonathan Myers said the turnaround was accompanied by a marked improvement in profitability in the quarter.
He added: “As a result, we remain confident in delivering against FY23 expectations and that further strategic progress will be made in the balance of FY23 and into FY24."
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Deutsche Bank recently highlighted a price target of 260p, with today’s underlying sales growth rate of 6.2% coming in ahead of its 5.2% forecast.
Oxford Instruments, meanwhile, extended its share price since October to around 40% after the provider of products and services to industry and scientific research communities revealed trading ahead of expectations in the year to 31 March.
It said trends towards a “greener, healthier and more connected advanced society” have continued to drive strong growth in orders and revenue. This has been across markets including life science, semiconductors, advanced materials and quantum technology.
The company, which was founded in 1959 as the first technology business to be spun out from University of Oxford, forecast revenue growth for the year of around 22% alongside a broadly flat operating margin that has defied cost inflation pressures.
Shares rose 115p to 2560p as investors also backed the company’s succession planning following the appointment of TT Electronics boss Richard Tyson as incoming chief executive.
He will replace Ian Barkshire, who has been in charge for seven years during more than 25 years with the company. Chair Neil Carson said: "Ian Barkshire has led Oxford Instruments through a period of remarkable growth, positioning the business in structural growth markets and transforming it into a global leader.”
He added that Tyson’s record of success and expertise in high technology innovation and global manufacturing meant he was ideally placed to continue building the company. Tyson has been chief executive of TT since 2014.
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The update from Darktrace sent its shares 8p higher to 251p, even though the cyber security firm said that annual recurring revenues growth for 2023 will be at the low end of its previous guidance for a range between 29% and 31.5%.
This reflects the impact of economic uncertainty, but Darktrace’s improved operational efficiency means it now expects an underlying margin of around 19% compared with its previous 16% to 18.5% range.
Today’s share price rise returns the FTSE 250-listed stock to where it was in January just before New York hedge fund Quintessential Capital Management revealed a short position and questioned the company’s accounting policies in a 69-page report.
Analysts at Davy said today: “Darktrace has, so far, done a good job of demonstrating operational improvement in a challenging environment for enterprise software.
“If this dynamic persists and Darktrace continues to generate more cash, perhaps sceptics will steadily shift their view of the associated reward-to-risk ratio.”
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