Interactive Investor

Three big share movers to brighten up a dull day

This trio of high-flying stocks stood out in an otherwise dull day for the broader UK stock market. Graeme Evans reveals what’s boosted sentiment.

26th March 2024 15:52

by Graeme Evans from interactive investor

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The company behind bookmaker William Hill enjoyed a change in stock market fortunes today as 888 Holdings (LSE:888) joined Softcat (LSE:SCT) and Luceco (LSE:LUCE) among the FTSE All-Share front-runners.

The gaming firm surged in value after its new boss used annual results to unveil a refreshed strategy focused on four key markets, alongside plans for a name change to evoke plc.

The shares, which have struggled since the 2022 acquisition of the non-US operations of William Hill, were among a number of big movers in an otherwise dour stock market session.

The confident tone of technology reseller Softcat underpinned another strong showing by its shares, which are now up 16% this year after today’s rise of 78p to 1,564p.

Chief executive Graham Charlton said in today’s half-year results: “The future opportunity in our industry remains incredibly exciting. AI, data management and cybersecurity, amongst other technologies, continue to drive rapid transformation in technology.”

He added that the tailwinds “play perfectly into our comprehensive offering” at a time when customers need broader and more integrated support.

The opportunity to increase market share has been backed up through a 15% increase in Softcat headcount. In today’s results, operating profits rose 5.8% to £66.7 million, and the company has declared plans to increase the dividend for payment on 22 May by 6.3% to 8.5p.

Guidance for the current 2024-25 financial year is unchanged but analysts at Jefferies believe the first-half performance has gone some way to de-risking the outlook. It has a price target of 1,800p, a level last seen in December 2021.

The US bank added: “Following volatility elsewhere in the sector, these results should serve as a reminder that Softcat is a premium operator that is fully deserving of a premium multiple.”

Shares in LED lighting and wiring accessories business Luceco led the FTSE All-Share after its 2023 results came in at the top end of the company’s guidance given in January.

Revenues of £209 million were 1.3% higher and adjusted profits lifted by 9.3% to £21.2 million, fuelled by the margin support of easing materials and freight costs. A final dividend of 3.2p is due to be paid on 17 May, resulting in a 4.3% rise for the year to 4.8p.

Enhancements to its product portfolio during the year included the launch of its second series of electric vehicle chargers sold under the Sync EV brand.

Charger sales totalled just under £8 million, growth of 44% the company views as “highly encouraging” given a slight slowdown in the EV vehicle market in the second half of the year.

Finance boss Will Hoy said: “We remain excited about the opportunities that this new sector will provide as the vehicle market moves towards electrification by 2035 within the UK - our current key marketplace.”

Shares jumped 12.8p to 134p as analysts at Liberum said a forecast debt ratio below the target range offered scope for Luceco to finance further organic investment and M&A.

The broker has a target price of 170p, while DB Numis is at 165p after lifting earnings estimates in the wake of February's £8.6 million acquisition of cable solutions firm D-Line.

The William Hill business 888 Holdings jumped 8.95p to 92.75p after using its annual results to set out “bold” financial targets alongside an updated strategy and new corporate identity.

Chief executive Per Widerström, who joined the company in October, said: “Today marks the beginning of an exciting new dawn for this business.”

His plan includes a tighter focus on four key markets of UK, Italy, Spain and Denmark as the newly-named evoke plc targets 5-9% revenue growth per year and underlying margin expansion of about 100 basis points a year.

DB Numis said the plan looked realistic but that it would need to see early evidence of the strategy being executed before moving from its current “Hold” recommendation.

Peel Hunt is more optimistic after reiterating its price target of 175p. The broker said: “It is clear that implementation has already begun, not least from the punchy promotions of William Hill around the Cheltenham Festival.”

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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    UK sharesAIM & small cap shares

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