Interactive Investor

Shares round-up: Sage, 4imprint, Ibstock

21st January 2021 14:13

Graeme Evans from interactive investor

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New-year optimism boosts the fortunes of these FTSE 350 stocks, as well as select AIM companies.

The fortunes of FTSE 350 index stocks Sage (LSE:SGE), 4imprint (LSE:FOUR) and Ibstock (LSE:IBST) were boosted today after the trio highlighted reasons for new-year optimism in the face of pandemic headwinds.

Several other stocks showed they are continuing to benefit from favourable trading conditions, with AIM-traded Keystone Law (LSE:KEYS), Sanderson Design (LSE:SDG) and Team17 (LSE:TM17) among those sharply higher.

The days most significant move in the FTSE 100 index came from accounting software group Sage after a reassuring trading update revealed 4.7% growth in recurring revenues in the final three months of 2020.

The figure is within the companys targeted 3% to 5% range and highlighted further progress towards getting customers on to cloud-based subscription services.

Shares, which fell sharply in November after CEO Steve Hare surprised the City with plans for additional investment of more than £50 million, rose 19.8p to 592.8p amid relief that demand for its accounting and payroll services is holding up among SME customers.

Analysts at Jefferies are positive on the stock, with a price target of 780p, and said the performance was better than expected given the ongoing Covid-19 pressures.

Manchester-based 4imprint made its mark on the FTSE 250 index after the distributor of branded mugs and corporate merchandise revealed that order intake was back towards 70% of prior year levels in the final quarter of 2020. It also highlighted a strong financial position, with year-end cash of almost $40 million (£29.3 million).

The highly regarded company, which generates most of its revenues in North America, saw shares slump by 60% in less than a month during March after the coronavirus hit corporate demand and raised fears about its sizeable China supply chain.

Products range from basic giveaways such as pens, bags and drinkware to higher-value items such as embroidered apparel or ear buds. All-important trade shows remain cancelled, but the company believes it is well placed for when the US economy recovers.

Shares rose 80p to 2,340p and analysts at Peel Hunt increased their price target by 100p to 2,500p today. They said: “4imprint remains in a strong financial and commercial position, which it will exploit as Covid progressively recedes”.

Ibstock was the biggest riser in the FTSE 250 index after the brick, tile and concrete products specialist upgraded guidance on 2020 earnings due to the resilience of its end-markets, including among customers in the new-build sector.

It said: “Market fundamentals for the groups products remain robust, with a structural deficit of housing, low interest rates, and government policy which is supportive of the role the construction sector will play in the UK economic recovery.”

With Ibstock ready to capitalise on the economic recovery, shares jumped 10% or 20.8p to 217.6p, the highest level since mid-March but still short of the high at 322p a year ago.

On AIM, Team17 continued to benefit from strong demand for video gaming in the peak November and December months. The business, which is best known for the Worms, Escapists and Overcooked franchises, also withstood competitive pricing pressures.

Underlying earnings rose 36% last year and Team17 said it launched nine titles in the second half. That is more than any previous year despite the restraints on working during the pandemic. It is now valued at more than £1 billion after a 90% rise in shares in the past year.

Elsewhere on AIM, shares in challenger law firm Keystone Law jumped 8% to 548p after it reported unexpectedly strong demand over the festive period.

The company, whose services are delivered by over 345 self-employed lawyers, said the strong trading throughout December and early January meant profits for the year to the end of this month will be materially ahead of the £5.1 million forecast in the City.

Interior furnishing company Sanderson Design, which used to be known as Walker Greenbank, also had a busier-than-expected December after seeing sales jump 15% as the UK's home improvement boom continued.

The company behind brands including Zoffany, Morris & Co and Harlequin now expects profits to be not less than £6.3 million but warned that current UK lockdown restrictions have tempered sales progress during January. Shares were 7.5p higher at 113p.

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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