Shares round-up: IAG, Rolls-Royce, Card Factory, GB Group
21st April 2022 15:19
by Graeme Evans from interactive investor
Travel companies and some select small-caps have given investors something to celebrate. Our City expert talks through the day's big movers.
Renewed optimism in the travel sector boosted British Airways owner International Consolidated Airlines Group SA (LSE:IAG) today as investors swept up heavily-sold stocks across the London market.
A bullish update from transatlantic rival United Airlines Holdings Inc (NASDAQ:UAL) triggered the buying to leave IAG 11.3p higher at 155.3p, its highest since mid February and 2% lower across 2022.
United said business and long-haul bookings were accelerating rapidly following the easing of Covid restrictions, meaning that it expects to return to profitability in the second quarter.
Its chief executive Scott Kirby said: "The demand environment is the strongest it's been in my 30 years in the industry. We're now seeing clear evidence that the second quarter will be an historic inflection point for our business.”
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As well as the favourable read-across for IAG, shares in easyJet (LSE:EZJ) and Wizz Air Holdings (LSE:WIZZ) were among other beneficiaries as they jumped 37.4p to 601p and 245p to 3262p in the FTSE 250.
Hopes for a pick-up in engine flying hours also meant Rolls-Royce Holdings (LSE:RR.) shares improved 3.75p to 97.17p and GKN owner Melrose Industries (LSE:MRO) lifted 5.75p to 129.8p.
The bargain hunting trend was not limited to travel, however, as ITV (LSE:ITV) and Royal Mail (LSE:RMG) were in demand in the FTSE 100 index. The two smallest stocks in London’s top flight have endured a bruising few weeks but rallied 5p to 77.5p and 21.0p to 360.7p respectively.
In the FTSE 250 index, other stocks higher included travel retail businesses WH Smith (LSE:SMWH) and SSP Group (LSE:SSPG) after gains of 58.5p to 1,493.5p and 15.5p to 244.1p.
The UK-focused FTSE 250 comfortably outperformed the FTSE 100 following a rise of 1%. Other second tier performers included building products manufacturer Ibstock (LSE:IBST), whose shares rose 11.9p to 178.3p after a stronger-than-expected first quarter performance.
It continues to see significant levels of input cost inflation, but its hedging strategy means energy requirements are substantially covered for the first half of the year and by around 75% for the second half.
With demand in new build housing and the repair and maintenance market both robust, Ibstock backed up its optimism by announcing a £30 million share buyback programme.
Peel Hunt analysts have a target price of 265p and said Ibstock shares continue to look good value, trading on less than 10 times forecast 2022 earnings and with a 5.1% dividend yield.
Among smaller stocks doing well, Card Factory (LSE:CARD) jumped 14.45p to 59.7p on relief that it had secured a refinancing agreement without having to tap shareholders in an equity raise.
The greeting card and gift retailer had previously given a commitment to its banks that it would raise proceeds of £70 million by 30 July, but with strong cash flows it has reduced its debt pile to £79 million. The new £150 million debt facilities will run until September 2025.
On AIM, the identity verification and fraud software business GB Group (LSE:GBG) was among the top performers as it revealed that revenue and adjusted operating profit for the year to 31 March will be ahead of market expectations.
It also provided a positive update on the integration of recently-acquired Acuant, a deal which has substantially increased the company’s presence in North America.
Shares have been under pressure since November but rallied 83.5p to 654p after today’s update. Analysts at Investec Securities have a target price of 1,000p and said the 15% underlying sales growth set the business up strongly for the year ahead.
They added: “The tech sell-off has put the stock back three years, despite it now being an even stronger, broader, and thus more compelling story. The valuation leaves plenty of scope for upside re-rating as execution comes through.”
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