Sterling to Be Little Affected by UK Leadership Debate

UK Leadership Debate Seen Having Limited Impact on Pound

0906 GMT - A debate between the two candidates in the race to become U.K. prime minister later Monday may give investors a chance to gauge their positions on key topics but sterling will be little moved, ING says. Former Treasury chief Rishi Sunak and foreign secretary Liz Truss will hold their first head-to-head televised debate at 2000 GMT on the BBC. "It is too early to see a material impact on the pound, which should continue to move in line with risk appetite," ING analysts say in a note. GBP/USD may struggle to trade sustainably above 1.2000 in the current choppy market environment, they say. GBP/USD rises 0.1% to 1.2019 and EUR/GBP falls 0.1% to 0.8500. ([e-mail])

 
Companies News: 

Rotala Won't Take Further Legal Steps on Decision to Franchise Manchester's Bus Market

Rotala PLC said Monday that it won't take any further steps regarding its appeal against the decision by the mayor of Greater Manchester, England, to franchise the greater Manchester region's bus market, and that although disappointed with the court's decision, it nevertheless respects it.

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UK Watchdog Launches Probe Into ViaSat, Inmarsat Merger

The Competition and Markets Authority said Monday that it has started an investigation into the merger of ViaSat Inc. and Inmarsat PLC.

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U.K.-Backed OneWeb, France's Eutelsat in Talks to Create Satellite Operator Giant

Satellite companies OneWeb and Eutelsat Communications are discussing an all-share merger deal to create a satellite operator giant, a vote of confidence in an increasingly competitive sector that has seen the likes of Elon Musk and Jeff Bezos pour billions of dollars into space infrastructure.

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General Atlantic, L.P., Affiliates Report Stake In Immunocore Holdings >IMCR

General Atlantic, L.P. and affiliates reported a stake in Immunocore Holdings PLC (IMCR) in a Schedule 13D filed with the U.S. Securities and Exchange Commission with a July 20, 2022 event date.

 
Market Talk: 

Vesuvius's 1H Erupts Past Expectations

1055 GMT - Vesuvius's ad hoc announcement showed a substantial beat, erupting past 1H expectations, Peel Hunt analysts Harry Philips and Henry Carver say in a research note. Stock in the U.K. engineered-ceramics manufacturer looks to be trading cheaply, they note, after an upgrade for the year. "The strength of Vesuvius's market position in steel flow controls and foundries, which are process critical, provides it with a pricing profile that remains under-recognized in our view," they say. Peel Hunt has a buy rating on the stock with target price of 500 pence. Shares are up 7.5% at 347.20 pence. ([e-mail])

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Vodafone's 1Q Trading Update Lacks Dial-Moving Deal

1048 GMT - Vodafone's first-quarter trading update lacked the hoped-for major acquisition that could have really moved the dial, AJ Bell investment director Russ Mould says. Instead, the company's Germany service revenue fell back due to regulatory changes, he adds. In the U.K., the telecommunications company has introduced price rises and roaming charges for those traveling abroad, which balances the German dip out, he says. "Vodafone's share price continues to have all the vitality of a beached whale, having struggled to make any meaningful progress for more than a decade," Mould says. Shares trade up 0.1% at 129.10 pence. ([e-mail])

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Premier Foods Acquisition Demonstrates Improvements

1026 GMT - Premier Foods' acquisition of The Spice Tailor for GBP43.8 million is its first buy for 16 years, demonstrating the massive performance and balance sheet improvements in recent years, Peel Hunt says. The food manufacturer is growing sales at a 20% compound annual growth rate and aking strong progress in the U.K., Australia and Canada, Peel Hunt analysts Charles Hall and Andrew Ford say in a research note. "This deal should accelerate top-line growth and strengthen the international branded profile of Premier. The price is spicy as well, but the scale of opportunity is highly attractive in our view," the brokerage says. Peel Hunt retains its buy rating and 145 pence price target. Shares are up 3.7% at 117.2 pence. ([e-mail])

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Premier Foods Makes a Spicy, Well-Judged Acquisition

1002 GMT - Premier Foods' GBP43.8 million acquisition of meal kits business The Spice Tailor looks well-judged and consistent with its strategy of allocating capital to high-growth bolt-ons, Jefferies says. The food manufacturer's acquisition adds spice to the proposition for investors as the brand is well aligned with current trends toward ethnic cuisines and scratch cooking and supports international expansion, Jefferies analysts Martin Deboo and Feng Zhang say in a research note. "This, plus the better-than-expected first quarter [performance], continues to keep us interested," the U.S. bank says, adding that Premier's share price looks cheap. Jefferies retains its buy rating and 145.0 pence price target on the stock. Shares are up 3.7% at 117.2 pence. ([e-mail])

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Premier Foods' New Acquisition is Warmly Welcome

0937 GMT - Premier Foods' GBP43.8 million acquisition of Indian and Southeast Asian meal-kit brand The Spice Tailor is a warmly welcome deal and will drive growth, Shore Capital says. The food manufacturer's deal, funded from internal resources, is expected to be earnings per share enhancing in its first full year but the real value will be over the medium-term, adding strength in the meal-kit category and complementing Premier's internationalization, Shore analyst Darren Shirley says in a research note. "If this sets the tone for future such activity, then bright days are ahead, and the equity rating should expand," the U.K. investment group says. Shore has Premier Foods as a house stock. Shares are up 4.3% at 117.8 pence. ([e-mail])

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S4 Capital's Earnings Margin Pressure Seen as More Short Term

0934 GMT - S4 Capital's unscheduled update flags a significant rise in headcount costs, which should hit margins, but a hiring brake and revenue growth should relieve margin pressure in due course, Jefferies analysts say in a research note. "The main issue is the balance of costs versus revenue, with a squeeze in May/June implying unrealistic profit expectations for the year," they say. S4 benefits from structural growth tailwinds and it should be able to achieve a 20%-22% Ebitda margin longer term, the analysts say. Jefferies keeps its buy rating on the stock but cuts its price target to 170 pence from 570 pence. Shares trade down 4.0% at 118.60 pence. ([e-mail])

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Haleon's Long-Term Growth Could Be Limited

0931 GMT - Haleon is the biggest new stock to list on the FTSE 100 with an promising and unique offer, but its long-term growth momentum will likely be limited, Jefferies analysts say in a research note. While the GSK spinoff's market share is in decline, like-for-like sales guidance of 4%-6% for 2022 will require a turnaround in growth to be achieved, they say, noting that there is little evidence of this happening in its main market of the U.S. Meanwhile, net debt is set to remain high amid a risk-averse environment, the analysts add. "The facts keep getting in the way of the good story for us", they say. Jefferies starts the stock coverage with a hold recommendation and a price target of 330 pence. ([e-mail])

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Premier's Spice Tailor Buy is Tasty Despite Fiery Price

0930 GMT - Premier Foods rises 3% after the owner of Sharwood's and Loyd Grossman cooking sauces said it was buying Indian and south-east Asian meal-kit brand The Spice Tailor for an initial GBP44 million. Premier's first acquisition for 16 years shows the big performance and balance-sheet improvements it has made lately, Peel Hunt says. The Spice Tailor, which is increasing sales at a 20% compound annual growth rate and is making strong progress in Australia and Canada as well as the U.K., should help Premier accelerate top-line growth and strengthen its international profile, Peel says. "The price is spicy as well, but the scale of opportunity is highly attractive," Peel analysts say in a note. Premier is a Peel Hunt corporate client. ([e-mail])

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Vodafone's Germany Performance Looks Slightly Weak

0837 GMT - Vodafone's first-quarter update shows it is performing ahead of consensus in the U.K. and Turkey, but slightly behind in Germany and Italy, Jefferies analysts say in a research note. The U.K.-based telecommunications company is confident of stabilizing German fixed broadband losses by the end of the year, the analysts note, adding that customer behavior is being monitored, but it isn't yet seeing an increase in late payments or spin-down. Tougher comparators in the U.K., Spain and Italy are highlighted from the second-quarter onward. Jefferies has a hold rating on the stock with a price target of 122.00 pence. Shares trade up 0.1% at 129.18 pence. ([e-mail])

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