London Shares Trade Flat; Crude Gains Lift Oil -2-

0850 GMT - DS Smith still faces hurdles, but the outlook is improving, says Interactive Investor after the packaging manufacturer reported lower annual revenue and profit. Like other companies, Smith has had to tackle higher costs resulting from pandemic-related safety and operational changes and extreme supply constraints, hitting profit and revenue in the year to April, Interactive says. Still, the year ended better than it started, leaving Smith relatively well-placed to cash in on increased demand for packaging as people buy more goods online. "In particular, strong second-half momentum has continued into the new financial year, which bodes well for prospects, while some of the previously incurred costs will be recovered by higher pricing for customers," Interactive's Richard Hunter says. ([e-mail])

Uranium Market Fundamentals Point to Price Strengthening

0847 GMT - The uranium price is up 7.5% year to date, supported by a recovery of sentiment around global energy markets, Berenberg says. The brokerage estimates that more than 40 million pounds of uranium production capacity have been taken off stream over the past years, and that demand should now rise driven by the restart of the Japanese reactors and as new nuclear plants are built globally. In addition, utilities will be re-entering the market as their contract coverage rates decline, the German firm says. Berenberg is a corporate broker for Yellow Cake, a company focused on purchasing uranium. ([e-mail])

Lone Star's Final Offer Puts Ball in Senior's Court

0845 GMT - Lone Star raised its bid for Senior and declared it final, which puts the ball in the U.K. engineering company's court, Peel Hunt says. The 200 pence-a-share cash offer from the U.S. private-equity group--which compares with a previous bid of 185 pence a share--looks relatively attractive given current market conditions, but Senior has some large long-term shareholders who could influence the situation, Peel Hunt says. "Reasons to reject the offer include the fact that the share price peaked at 320p back in June 2018. However, the outlook for aerospace markets looked very different back then, and it will take a long time for end markets to recover," the U.K. brokerage says. ([e-mail])

Aston Martin's Dispute With Nebula Might Be Bumpy

0838 GMT - Aston Martin's chaotic journey since joining the stock market in 2018 has taken a new turn with a legal dispute, severing ties with Nebula Project and scrapping Nebula's royalty deal, AJ Bell says. Aston investors might welcome the luxury-car maker's decisive action, but the royalties are likely to be hard fought given Nebula helped with financing when the company was going through a very bad patch, AJ Bell says. "One can only speculate, but Nebula may well try and seek alternative compensation if it cannot earn royalties in the future, perhaps arguing that it played a crucial supporting role to help Aston Martin during one of its darkest hours," the brokerage says. Shares are down 2.4% at 1,889 pence. ([e-mail])

Grafton's IKH Acquisition Provides a Solid Base for Expansion

0825 GMT - Building-materials distributor Grafton's acquisition of Finnish wholesaler and distributor IKH is in line with its strategy to pursue inorganic expansion across Europe, strengthening its market position and supported by a strong balance sheet, Citi's Ami Galla says. "IKH has a dominant market position in Finland and provides a solid foundation to expand its footprint across the region driving further growth opportunities over the medium term," the U.S. bank says. Grafton's acquisition could add around 3% and up to 8% to consensus earnings before interest and taxes for 2021 and 2022 respectively, Citi says, retaining its buy recommendation and target price of 1,310 pence on the stock. Shares are up 4% at 1,170 pence. ([e-mail])

Kingspan's Strong 2Q Momentum Leads to Forecast Upgrades

0814 GMT - Kingspan's second update in as many months is impressive, with strong momentum heading into the second quarter and demonstrating its ability to navigate operational challenges seamlessly, Goodbody says. The building-and-insulation materials company's update further underpins positive sentiment, particularly when coupled with its balance sheet optionality and its positioning to deliver energy efficient building materials, aiding the drive for sustainable construction, the brokerage says. "We are upgrading fiscal 2021 trading profit forecasts by 12% to around EUR640 million implying second half growth of 5% versus the second half of 2020 and 22% versus the second half of 2019," Goodbody says, retaining its buy recommendation. Shares are up 4.7% at EUR80.38. ([e-mail])

DS Smith's Pricing Recovery Should Drive Margin Improvement in FY 2022

0800 GMT - DS Smith's volume trends in 1Q of fiscal 2022 have continued on from the previous quarter and although there is significant input cost inflation, the packaging company expects to recover these fully through price increases, Citi says. There has been a significant increase in containerboard and box prices, although with a lag, and these should come through in fiscal 2022, the bank says. Still, a pricing recovery should drive margin improvement in fiscal 2022, which is expected to be around 9.6% according to a consensus forecast, versus 8.4% in fiscal 2021 and Citi expectations of around 10.1%. Citi has a buy rating on the stock and a 500 pence target price. ([e-mail])

Grafton's Acquisition of IKH Looks a Good Deal for Investors

0756 GMT - Building-materials distributor Grafton's acquisition of Finnish wholesaler and distributor IKH is no surprise, given the company's long-stated ambition to enter a fourth market whenever the opportunity presented itself, Goodbody says. The deal size, specialization of the acquired operations and earnings accretion will tick a lot of boxes for investors, and there is the potential for further cash for acquisitions if the strategic review of the traditional U.K. merchanting businesses results in a disposal, the brokerage says. "Such is the strength of the Grafton Group balance sheet there remains considerable optionality for capital deployment following the IKH acquisition," Goodbody says, retaining its buy rating. Shares are up 3.5% at 1,164 pence. ([e-mail])

Eurozone, Germany, France and UK PMIs Seen Beating Forecasts in June

0749 GMT - With reopening underway across the eurozone, high-frequency and early survey data imply a broad-based improvement in growth momentum in June, Goldman Sachs says. The American investment bank forecasts above-consensus gains for the eurozone composite purchasing managers' index. GS expects the eurozone composite PMI to increase by 2.4 points to 59.5 in June, reflecting a strong services-led gain in the composite index in Germany, forecast to reach 58.8, and further sizeable gains in France, where the composite PMI could rise to 59.5. In the U.K., GS also sees scope for an upside surprise relative to expectations for a small decline, with a new historical composite high of 63.4 driven mainly by services. Eurozone, Germany, France and U.K. flash PMIs will be published Wednesday. ([e-mail])

U.K. Expected to Emerge From Latest Covid-19 Surge With Limited Economic Damage

0740 GMT - The U.K. can get through the new surge in infections without having to tighten restrictions and thus with only limited economic damage, Kallum Pickering, senior economist at Berenberg, says. This is because the U.K.'s high rate of vaccination--with 63.9% of the population having received at least one dose--has significantly weakened the link between infections and complications from Covid-19, he says. "Any damage from the later easing of remaining restrictions, as well as modestly lower in-store retail spending if consumers are temporarily more hesitant as infections rise, should be mitigated by stronger spending" once the wave has run its course, Pickering says. Berenberg forecasts U.K. GDP growth of 7.0% in 2021 and 5.4% in 2022. ([e-mail])

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06-22-21 0604ET