Interactive Investor

Shares round-up: banks, pubs and PZ Cussons

23rd September 2020 12:31

Graeme Evans from interactive investor


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Renewed risk appetite made it a second positive session for UK stocks. Here are the winners and losers.

Night-time curfews and more working from home failed to stop leisure stocks from joining a rebound in which the FTSE 100 index and FTSE 250 index rallied more than 1.5% Wednesday.

The second successive rise for the FTSE 100 following Monday's hefty sell-off owed much to gains by dollar-earning companies, after the pound weakened to a two-month low in the wake of the fresh Covid-19 curbs.

AstraZeneca (LSE:AZN) and GlaxoSmithKline (LSE:GSK) rose more than 2% to help the FTSE 100 index to return within sight of the 6,000 barrier. At the other end of the market cap spectrum, Rolls-Royce (LSE:RR.) and BA owner International Airlines Group (LSE:IAG) were more than 6% higher.

This renewed risk appetite also helped housebuilders Taylor Wimpey (LSE:TW.) and Barratt Developments (LSE:BDEV) to climb 5% and bombed-out banks NatWest (LSE:NWG) and Barclays (LSE:BARC) to lift 4%.

In the FTSE 250, the more UK focused index was 1.7% higher after gains for some of the second tier's bigger stocks, including Direct Line Insurance (LSE:DLG), Howden Joinery (LSE:HWDN) and Tate & Lyle (LSE:TATE). Cinema chain Cineworld (LSE:CINE) surged 13% ahead of tomorrow's interims results, while easyJet (LSE:EZJ) and Wizz Air (LSE:WIZZ) also pushed 7% and 4% higher respectively.

Pub chains including Mitchells & Butlers (LSE:MAB) and JD Wetherspoon (LSE:JDW) continued to take the curfew restrictions in their stride after City analysts said only a small proportion of their sales are taken after 10pm. The pair rose 6% and 4%, albeit from levels close to their low points for the crisis. 

Revolution Bars (LSE:RBG), which has more than 50 sites in town and city centres, was one exception after falling another 12% to 10.8p.

Even food travel firm SSP (LSE:SSPG) weathered the storm, despite the Upper Crust and Ritazza owner reporting that like-for-like sales are likely to be 86% down in the six months to 30 September at a revenues cost of about £1.3 billion. Actions to reduce the cost base mean second half operating losses are expected to be in the mid point of the £180 million to £250 million set out in June.

Sales are currently at 24% of pre-Covid levels, with demand expected to remain subdued this winter as more office employees are allowed to work from home. It pledged to re-open units where it sees demand recover. Shares rose 14% to 205.6p.

One of the biggest falls in the FTSE 250 index came from PZ Cussons (LSE:PZC) after it braced investors for a volatile year, despite the benefit of strong recent trading by its Carex hand wash brand.

Revenues for the first quarter to 31 August were up by 23% after Carex increased its market share in the UK to more than 40%, although this was offset by revenue declines for Original Source and Imperial Leather and a modest rise for the Beauty segment.

Analysts at Investec Securities cut their pre-tax profit forecasts for this year and next after Cussons warned of “volatility and risk” as well as the need for increased investment as part of the multi-year turnaround of the business under a new CEO.

Encouraged by a strong balance sheet, Investec still has a ‘buy’ recommendation and price target of 240p. Shares were 10.5p lower at 204.5p today, having recently set a high point for the year.

Among smaller stocks, Joules (LSE:JOUL) shares rose 7% to 98.6p after management said trading in the 13 weeks to 30 August had been ahead of expectations. Revenues were down 18%, with a strong performance for e-commerce channels helping to offset the impact of many stores and those of its wholesale partners being closed for part of the period.

Models and collectibles group Hornby (LSE:HRN) rose almost a penny to 34.4p after it said recent trading had been better than initially expected ahead of the all-important Christmas period.

Ten Entertainment Group (LSE:TEG) also gave a boost to its share price after it said that all of its 46 bowling centres had now reopened with trading at 83% of previous levels. It has returned to profit and cash generation, despite only having 50% lane capacity. Shares were 3% higher at 128p, compared with 334.5p in January.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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