Shares round-up: Johnson Matthey, Naked Wines

More good news on vaccines fails to fix market jitters, but some stocks do well despite Covid-19.

More encouraging vaccine trial results failed to remedy a bout of market jitters today as investors digested the downside risks from a second wave of Covid-19 cases.

BP (LSE:BP.) and Royal Dutch Shell (LSE:RDSB) were among the biggest fallers as the FTSE 100 index surrendered some of its recent gains, despite AstraZeneca (LSE:AZN) and the University of Oxford showing that their planned vaccine produces a strong immune response in older adults.

Sentiment has been shaken by the rising number of Covid-19 cases in the United States, where the threat of new restrictions is weighing on the appetite for risk. The FTSE 100 index had been up by 15% at one point this month, with the positive vaccine news from Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) and US-based Moderna (NASDAQ:MRNA) helping the likes of mining giant BHP rise by as much as 12%.

But UBS analysts said yesterday that the recent surge in metal prices warranted some profit-taking as they shifted their stance on commodities back to neutral from most preferred.

The Swiss bank said:

“The risk to demand for commodities needs to be considered with the latest Covid-19 waves in Europe and the US, particularly given mobility restrictions and their negative impact on oil demand.”

• ii view: Johnson Matthey assesses Covid hit
• ii view: Johnson Matthey as a hydrogen fuel cell play
• Reaction to Johnson Matthey results and dividend cut

Having seen diversified commodities rise by 11.8% on a spot basis since mid-July, it said now was the time for investors to take a more nuanced approach towards the sector.

UBS still thinks there is ample upside potential for crude oil in 2021 due to the resumption of international air travel once a vaccine become widely available.

Essential for the next leg up in oil prices is not a steady drop in oil inventories, however, but a reversal of global oil spare capacity of seven million to 10 million barrels per day.

“With a lack of supply-side investments, pricing power can partially return in favour of oil producers. This sets the tone for brent crude oil prices to trade at $55-60 (£41-45) in the second half of 2021.”

The bank is also targeting a last bounce in gold, reflecting the yellow metal's short-term diversification benefits and the fact that central banks are likely to keep monetary policy accommodative for the timebeing. 

Higher precious metal prices boosted revenues figures from FTSE 100-listed Johnson Matthey (LSE:JMAT) today, with the world's largest refiner of secondary platinum group metals able to grow its top line by 2% to almost £7 billion in the six months to 30 September.

However, demand in its clean air division was much lower than last year, leading to an overall 88% slide in pre-tax profits to £26 million in the period. Trading conditions have since shown signs of improvement, particularly in China, and the maker of emissions control catalysts is seeing a pick-up in activity among car makers.

• AIM stocks to own in the second lockdown
• Are you saving enough for retirement? Our calculator can help you find out

The path of recovery, however, remains uncertain and the company is still not providing guidance for the year to 31 March. In light of this backdrop, shares fell 102p to 2,448p as Johnson Matthey also cut its interim dividend by 18% to 20p a share.

In upbeat corporate news, AIM investors have continued to toast the performance of Naked Wines (LSE:WINE) as the subscription business benefits from favourable trends.

CEO Nick Devlin believes that Covid-19 has been an “inflection point” for the online wine market as buyers recruited during the pandemic become repeat customers. This is particularly significant in the United States, where the company has described the crisis as doing 20 years' work in one month in terms of channel shift.

Today's interim results showed that revenues jumped 80% to £157.1 million, with the contribution from repeat customers rising 89% to £36.2 million. It has doubled warehouse capacity and now expects revenues for the year to grow by between 55% and 65%.

The half-year adjusted loss of £3.2 million improved by £1.3 million despite higher investment. 

Devlin added:

“Naked Wines is a bigger, better business than it was 12 months ago. The last six months have been a critical period in the development of the company. We have delivered exceptional growth and a permanent step change in scale and efficiency for the organisation.”

Shares in the company, whose split from the retail operations of Majestic Wine last December now looks particularly well timed, jumped to 539p in the opening minutes of trading before retreating back to 488.5p, a drop of 2% on the day.