Interactive Investor

Shares round-up: Wood Group, OneSavings Bank, Renishaw, Boohoo

There’s plenty going on in stock markets currently, with takeover bids and corporate results grabbing headlines. City writer Graeme Evans runs through the big stories.

8th May 2024 15:35

by Graeme Evans from interactive investor

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Takeover target John Wood Group (LSE:WG.) led the FTSE 250 index today as mid-cap investors also focused on encouraging signs at ONESAVINGS BANK PLC (LSE:1SBB), Renishaw (LSE:RSW) and AIM’s former high-flyer Boohoo Group (LSE:BOO).

Wood surged 25p to 190p after the energy and materials-focused consulting and projects firm said it had rejected another takeover proposal, this time from Dubai-based engineering company Sidara at a price of 205p a share or £1.4 billion.

The move comes a year after asset manager Apollo walked away from Wood having made a fifth and final approach at 240p–a-share. The shares have traded between 125p and 175p in the period since then.

The Aberdeen-based firm is in the midst of a three-year growth plan and said today that the Sidara proposal “fundamentally undervalued Wood and its future prospects”.

More than half of 2023 revenues came from the oil and gas sector, where Wood stands to benefit from demands for solutions addressing energy security or energy transition. It is also in a number of smaller markets with growth potential, such as hydrogen and carbon capture.

The strong recent run for valuations in financial services extended to OSB Group today after the specialist lender and savings business stuck to margin guidance in its first-quarter update.

Shares rallied 15p to 444p amid hopes that the company’s resilient start to 2024 has drawn a line under last year’s run of weaker guidance that left OSB trading as low as 280p.

Chief executive Andy Golding continues to expect a full-year net interest margin unchanged on 2023’s at 2.5%. He added that demand in the core buy-to-let and residential sub-segments remains positive as the company writes new business at attractive yields.

Analysts at Jefferies have a price target of 780p but noted the fourth sequential increase in three-month plus arrears to 1.5%. While it said this was not unexpected in the context of higher borrowing costs, it said it would be encouraging to see this stabilise in 2024.

Precision engineering Renishaw fell 160p to just below 3993p, despite reporting third-quarter revenues 4% higher than the average in the previous two quarters.

Additive manufacturing delivered strong growth, while the Gloucestershire-based firm also reported early signs of recovery in demand from semiconductor equipment builders.

Renishaw, which is due to hold a capital markets day on 18 June, expects the performance to continue to strengthen as it tightened full-year guidance for revenues in the range of £680 million and £700 million and adjusted profit before tax of £122 million to £135 million.

The shares, which were 4,350p prior to the 2 April disclosure by Siemens that it is no longer considering a takeover approach, have been valued at 5,000p by Peel Hunt analysts.

Boohoo shares held firm at 35p today, despite a wider bottom-line loss of £31 million. A 17% fall in revenues to £1.5 billion and 7% decline in underlying earnings to £58.6 million also came in towards the lower end of guidance.

The performance covering the year to the end of February reflected inflation and consumer confidence pressures, but Boohoo said its investment cycle was now complete and that significant steps had been taken to reposition for “sustainable, profitable growth”.

Trading remains tough but with momentum in core brands, which include PrettyLittleThing and Karen Millen, and signs of progress in the development of its Debenhams online marketplace.

Broker Peel Hunt cut forecasts for this year to reflect a slower pace of recovery but also highlighted a sense of optimism rather than doom.

It added: “Management is not calling the turn, but there is more confidence in the direction of travel, with work around the offer, margins and cost savings giving support to a better year ahead.”

The City firm has a price target of 75p, the same as counterparts at Jefferies. The latter described Debenhams as an increasingly interesting asset.

The bank said: “It is capital-light, stockless, and now has over 3,500 brands on the site. Moreover, it offers opportunities to profitably trade Boohoo’s non-core brands and extend the group's customer reach and range. We expect Debenhams to become an increasing point of focus over the next year.”

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.

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