Stocks round-up: Halfords, RM, AMTE Power, On The Beach

Jittery investors dumped Halfords and RM today but consumer spending fears were put to one side at On The Beach after its chief executive splashed the cash.

A broker downgrade had Halfords (LSE:HFD) shares back-pedalling today but there was renewed optimism at On The Beach (LSE:OTB) after its founder bought shares worth £2 million.

Among other small-caps, Amte Power (LSE:AMTE) surged after the maker of lithium-ion and sodium-ion battery cells for specialist markets delivered an encouraging operational update.

But RM (LSE:RM.) Group lost more than a third of its value after the education resources and IT provider decided not to pay a half-year dividend due to its elevated debt level of £41.5 million.

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The rollout of a new IT platform has been more challenging than expected and RM’s outlook is clouded by the impact of higher salaries, energy costs and inflation on school budgets.

Today’s results showed a drop in adjusted earnings per share to 4p from 7.5p but underlying revenues trends are encouraging with each of its divisions set for growth this year.

Chief executive Neil Martin said this revenue performance showed the strength of RM’s offer and market positioning but that “there is more work to do” to achieve his margin aspirations.

Shares tumbled 39.2p to a multi-year low of 59.8p, but analysts at Peel Hunt remain supportive through a new target price of 225p.

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The house broker said: “Its transformation plan is taking longer and inflation is causing pressure. Hence RM’s margin is expected to be diluted in the short term.

“Nevertheless, the long-term benefits appear to be growing with positive rhetoric from the UK government on multi-academy trusts. RM is winning deals outside its previous target areas and some brands’ revenues are above pre-Covid.”

The pressure on Halfords left shares at their lowest level since the early months of the pandemic, with confidence dealt a big blow by today’s Panmure Gordon downgrade.

The broker cut its target price by half to 150p as concerns mount over the strength of consumer demand. Shares fell 25.1p to 128.3p, offsetting recent efforts by Halfords to focus on “higher, more predictable and more sustainable” returns in motoring services.

The recent acquisitions of National and Iverson Tyres mean motoring now accounts for over 70% of total revenues, with products and services in this category tending to be needs-based rather than discretionary.

It has also increased its focus on electric forms of transport such as e-bikes, e-scooters and accessories.

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The weaker consumer outlook has dented On The Beach shares in recent weeks, although that trend reversed today when founder and chief executive Simon Cooper disclosed a purchase worth almost £2 million.

He bought on Friday at 129.5p, bringing his stake in the former FTSE 250-listed company to 5.6%. The shares had been as low as 102p earlier this month, having fallen from 300p in February due to fears that soaring energy bills will scupper holiday plans.

The confidence boost from Cooper’s investment meant the All-Share company rose 11.4p to 126.2p.

At AMTE Power, shares continue to build on the improvement seen since last month’s announcement on the location of its first “MegaFactory” to serve the UK renewable energy storage and electric vehicle markets.

The site in Dundee will have the capacity to produce over eight million cells, potentially generating revenues of over £200 million a year.  Investment costs are set to be between £160-£190 million, with an opening date of the third quarter of 2025.

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A funding package still needs to be established, but analysts at WH Ireland believe the “unique” and highly competitive position of AMTE’s cells and their proximity to commerciality are reasons to think the medium and long-term prospects are significant.

They added after today’s in-line operational update: “As always, near-term cost-pressures cannot be wholly discounted, but the company operates at the heart of a rapidly growing sector and appears to be well-placed to manage these.”

Shares were 4.5p higher at 97p today, having rallied from 58p in mid-July. They were more than 200p in September last year.