FTSE 250 shares round-up: Wizz Air, M&B, Ibstock, Paragon Banking

Mid-caps have underperformed their blue-chip cousins this year, but there’s lots to like about this bunch of high-flyers.

The earnings season rebound for the FTSE 250 index resumed today as pub and airline stocks, Paragon Banking Group (LSE:PAG) and building materials firm Ibstock (LSE:IBST) all offered support.

Having fallen 1.2% yesterday after consumer-facing stocks were sold in reaction to warnings from Walmart (NYSE:WMT) and Wickes (LSE:WIX), the mid-cap index returned to form thanks to another reassuring batch of trading updates and interim results.

The FTSE 250 index lifted half a percent, up 96.60 points to 19,665, and is still more than 6% higher over the past fortnight. That’s a performance slightly ahead of the FTSE 100 index, despite today’s flurry of strong blue-chip updates from the likes of Lloyds Banking Group (LSE:LLOY), Reckitt Benckiser (LSE:RKT) and Smurfit Kappa (LSE:SKG).

Eastern European carrier Wizz Air (LSE:WIZZ) led the FTSE 250, with shares up 176p to 2,141p after its first-quarter results boosted optimism for the rest of the summer now that operational disruption at airports appears to be stabilising.

Wizz said it expects continued month-on-month momentum in net total fares and loads, resulting in a 10% improvement in second quarter unit revenues of 10% over 2020.

• Discover more: Trading Account | Top UK shares | Share prices today
• 12 stock ideas for brave bargain hunters
• Lloyds Bank shares soar on impressive results and dividend boost
• Walmart profits warning triggers UK retail sector sell-off

The update came as first-quarter results met the company’s previous guidance, although fuel costs more than double their pre-pandemic level meant a bigger operating loss of 285 million euros (£240 million) in the three months to the end of June.

The rebound for Wizz shares was mirrored by British Airways owner International Consolidated Airlines Group (LSE:IAG) in the FTSE 100 and easyJet (LSE:EZJ) in the FTSE 250, which climbed 25.2p to its highest level since the end of June at 398.5p.

The risers board outside of the FTSE 250 also featured a recovery for pub stocks after Marston's (LSE:MARS)’s reported like-for-like sales just 1% below their pre-pandemic level in the 16 weeks to 23 July.

The rate had been slightly ahead until four weeks ago, but food sales have since weakened due to the recent spell of very hot weather. The group, which has an estate of 1,481 pubs, said: “The level of customer demand has been encouraging, notwithstanding the uncertainty around the cost of living for consumers.”

Marston's also said it had decided to fix its electricity rates for the period from September to March, with an incremental cost impact of £3 million.

Peel Hunt downgraded its profit forecasts by more than the increase in electricity costs due to wider cost inflation, but continues to have a “buy” recommendation based on a new target price of 75p.

Marston’s shares were 1.5p higher at 48.5p in the FTSE All-Share, while Mitchells & Butlers (LSE:MAB) and JD Wetherspoon (LSE:JDW) rose 7.1p and 16.5p to 177.5p and 558p respectively in the FTSE 250.

• Stockwatch: should you bank a quick profit after rapid share surge?
• Dividends in the spotlight as this FTSE 100 pair pay less

Mid-cap risers included building materials business Ibstock after its interim results included a 32% hike in dividend to 3.3p a share. Profits rose £12 million to £51 million, and the clay bricks and concrete products specialist said trading in the first few weeks of the second half remained encouraging.

Chief executive Joe Hudson added: "We continue to manage inflation and supply chain pressures well and are making good progress with our strategic development plans.”

Having fallen 11% so far in 2022, the shares jumped 13.2p to 192.7p today. Peel Hunt, which has a price target of 265p, notes the stock is trading on 9.8 times the broker’s revised 2022 forecasts compared with an average of 13 times.

A FTSE 250-listed stock with momentum is Paragon Banking Group after its third-quarter update showed further growth in new business volumes for both mortgage and commercial lending.

The buy-to-let specialist stuck by the guidance it gave in half-year results, adding there were no signs of deteriorating credit quality. Chief executive Nigel Terrington said: “With strong levels of capital and an exemplary credit performance, we are well positioned to deal with any economic weakness that emerges.”

Shares rose 9.5p to 531p, but analysts at Liberum have a target price of 708p. Counterparts at Peel Hunt are at 690p after noting that shares trade on 7.9 times current year earnings and with a yield of 5.2%.

The broker said: “We see a significant amount of positive momentum behind Paragon Banking Group, which we do not feel is reflected in the valuation of the shares. The stock is now trading on just 1.2 times tangible book value, despite our expectation of sustainable mid-teens returns in the coming years.”