Must read: markets climb, Vodafone, Moonpig, H&M

Our head of investment rounds up the morning's big news.

GLOBAL MARKETS 

European markets have opened higher again as fears of contagion in the banking sector ease. The FTSE 100 is trading above 7,580, extending this week’s climb.

Most markets in Asia closed in the green with the ASX in Australia climbing over 1% to hit a two-week high, following a sharp rally on Wall Street with the tech-heavy Nasdaq gaining nearly 1.8%.

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VODAFONE 

Vodafone Group (LSE:VOD)’s CEO of its German arm, Philippe Rogge told the Handeslblatt newspaper he is aiming to cut 1,300 full-time jobs, or 6.3% of its 14,230 workforce in Europe’s largest economy. Earlier in March Vodafone said it was planning to slash 1,000 roles in Italy and in January the Financial Times reported that several hundred positions would be let go mostly in London. 

In February, Vodafone reported weakness in Germany, its biggest market with service revenue in Europe down 1.1% in the third quarter. Interim CEO Margherita Della Valle said it is ‘simply not good enough’. 

In November, Vodafone cut its annual profit forecast and announced a 1 billion cost-cutting strategy. At the end of 2022, Nick Read stepped down as CEO following a sharp slide in Vodafone’s shares under his four-year period as leader. 

Vodafone has been in talks with Three UK over a potential merger to combine networks in Britain. The CFO of Hutchinson’s Three UK Darren Purkis said discussions ‘are moving in the right direction.’

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Vodafone has been grappling with pressure on its share price, which is hovering near 2002 lows, a weakening economic backdrop with rampant inflation and rising energy bills as well as uncertainty in the C-suite following the CEO’s departure last year. Plus talks over its merger with Three UK are dragging on, adding to the sense of unease. 

However its share price fall has caught the attention of some opportunistic investors with John Malone from Liberty Global, an investor in ITV and Virgin Media O2 snapping up a 4.92% stake in Vodafone amid the belief that the stock is undervalued. French billionaire Xavier Niel also bought a 2.5% stake last September.”

MOONPIG 

Shares in Moonpig Group Ordinary Shares (LSE:MOON) have surged over 13% after recording its largest ever week of sales in the UK ahead of Mother’s Day. It also kept its full-year earnings outlook unchanged for the year ending 30 April. 

While Moonpig has been struggling with postal strikes and the fading pandemic-era boom in online deliveries, the greetings card retailer is optimistic about revenue in the second half of the year. CEO Nickyl Raithatha said ‘we are excited to return to revenue growth in the year ahead.’ Investments in technology and marketing have helped drive the company in a more positive direction. Before today’s share price jump, the stock was roughly flat year-to-date and is still down over 40% over a one-year period. 

Having initially spiked after its IPO in February 2021, shares have been largely under pressure ever since. This adds to the feeling of weak confidence among investors in London as a key destination for tech sector flotations.

However analysts are still optimistic on the stock with an average price target up over 90% from the current share price and a majority of buy recommendations.” 

H&M

Hennes & Mauritz AB Class B (OMX:HM B) shares are soaring by more than 10%, after reporting a surprise operating profit for the fiscal first quarter between December and February of 725 million Swedish crowns versus 458 million year-on-year. This compares with expectations for a loss of 1.1 billion Swedish crowns. It forecasts that net sales in March will rise by 4% versus 3% last year.

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Despite the backdrop of rampant inflation, cost-of-living crises in many of its major markets, a softening consumer, and its exit from Russia, H&M’s workforce reduction and cost cutting strategy have boosted its bottom line. It achieved an operating margin of 1.3% and is targeting 10% by next year, a rather ambitious goal. 

H&M is nimbly responding to changing consumer preferences by attempting to shift away from fast fashion towards sustainability by purchasing the remaining shares of second-hand clothing platform Sellpy. 

However H&M continues to lag versus its biggest rival Inditex, the owner of Zara. But after today’s share price jump, H&M is up over 14% in 2023, catching up with Inditex which is up nearly 18%.