UK Banks' Modest Valuations Look Attractive Ahead of 1Q

UK Banks' Modest Valuations Look Attractive Ahead of 1Q

0951 GMT - U.K. banks are trading better than the market thinks but confidence will build gradually rather than in one worry-busting reporting season, says UBS in a note. "Though lenders are always at medium-term risk of rate cuts and higher end-point betas, U.K. banks are oversold relative to payout potential; they're much more stable propositions than their 16% average implied [cost of equity] suggests," say analysts Jason Napier and Sanjena Dadawala. First-quarter results look decent, with resilient margins, lower deposits, stable credit quality and liquid balance sheets from good capital generation. UBS has a buy rating on Lloyds--its near-term top pick for payouts and sustained returns--along with Barclays, HSBC, NatWest, Paragon, StanChart and Virgin Money, while it rates Close Brothers neutral. ([e-mail])

COMPANIES NEWS:

National Grid Sees FY 2023 Performance in Line, Underlying EPS Growth in Middle of 6%-8% Range

National Grid PLC said Friday that performance for fiscal 2023 has been in line with its expectations and that it continues to expect underlying earnings per share growth for the year in the middle of the 6%-8% growth range.

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AO World Sees FY 2023 Profits at Top End of Guidance

AO World PLC said Friday that it now expects fiscal 2023 profits to come in at the top end of its guidance as the potential adverse effects from trading risks, macroeconomic uncertainty and a tough consumer environment haven't materialized to the extent it had warned of in late February.

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Superdry Withdraws FY 2023 Profit Guidance; Considers Equity Capital Raise

Superdry PLC on Friday withdrew its profit guidance for fiscal 2023, citing the challenging environment and after experiencing slower-than-expected retail sales, and said it is considering an equity issue to strengthen its balance sheet.

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Premier Miton Group Assets Under Management Slipped in 2Q

Premier Miton Group PLC on Friday said its assets under management fell slightly in the second quarter of fiscal 2023 compared with the first quarter, but were higher than the six months prior as the banking shock toward the end of the period dented risk appetite.

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Dr. Martens Expects FY 23 Revenue Rise, Earnings Fall; CFO to Step Down

Dr. Martens PLC said Friday that it expects revenue to rise but earnings to fall in fiscal 2023, and that its chief financial officer will step down.

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888 Holdings 2022 Adjusted Earnings Rose Following William Hill Combination

888 Holdings PLC said Friday that pretax profit fell for 2022, but that adjusted earnings rose following its combination with William Hill.

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Hays Sees 2H Operating Profit Modestly Above 1H

Hays PLC on Friday said it expects operating profit for the second half of the year to be modestly higher than the first half as it posted a 5% rise in net fees on a like-for-like basis for the third quarter of fiscal 2023.

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Mirriad Advertising Terminates Sale Process

Mirriad Advertising PLC said Friday that it has decided to terminate its sale process as it believes there is no prospect that an offer will be forthcoming by early April.

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Carclo Sees FY 2023 Profit Decline After End of Manufacturing Contract

Carclo PLC said Friday that it expects to report that profit for fiscal 2023 fell after it faced various challenges including the ending of a manufacturing contract.

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YouGov Appoints Steve Hatch as CEO

YouGov PLC said Friday that it has appointed Steve Hatch as its next chief executive and that he will join the company on Aug. 1.

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Van Elle Sees FY 2023 Pretax Profit in Line, Revenue Rise

Van Elle Holdings PLC said Friday that it expects fiscal 2023 pretax profit to be in line with market expectations and revenue to rise 20%, but is preparing for weaker market conditions going into the new fiscal year.

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ITIM Swung to 2022 Pretax Loss on Higher Costs; Sees Good 2023 Performance Despite Climate

ITIM Group PLC said Friday that it swung to a 2022 pretax loss after booking higher costs, and that although it anticipated that 2023 would likely be a challenging year for retailers, its business will nonetheless fare well in this climate.

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Non-Standard Finance Gets Provisional $89Mln Debt Release Agreement

Non-Standard Finance PLC said Friday that it has agreed with secured lenders on the initial terms of a debt release as part of the company's capital raise.

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Roebuck Food Chairman Ted O'Neill to Step Down

Roebuck Food Group PLC said Friday that Chairman Ted O'Neill intends to step down from the company on Sept. 29.

MARKET TALK:

Dechra's Shares Not Fully Pricing in Takeover Offer Amid Uncertainty

1055 GMT - Dechra Pharmaceuticals shares rise more than 35% on Friday after the veterinary-pharmaceuticals company confirmed it was discussing a possible takeover offer from EQT that represents a 46.6% premium to Thursday's closing price. However, the company's share increase isn't fully pricing in the all-cash offer, suggesting there is still some uncertainty about whether the deal will take place, Interactive Investor head of investment Victoria Scholar says in a note. Dechra fared extremely well during the Covid-19 pandemic on the back of the 'pet boom', but it has struggled since then, she says. The group issued a profit warning in February and prior to the takeover talks, shares were trading at 2,800 pence compared with 3,822 pence a year ago, Scholar says. ([e-mail])

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Recruiters' Aren't Yet Seen With Upside Trend on Earnings

1002 GMT - Sentiment on staffing agencies might remain muted as the bottom hasn't yet been reached, says ING in a note after U.K. recruitment company Hays said it expects its second-half operating profit to be modestly above the first half's GBP97 million. ING points to a Bloomberg forecast from two estimates which sees the figure at GBP111.5 million. The difference could be explained by foreign exchange, says ING analyst Marc Zwartsenburg, adding that while the outlook is quite solid overall, he isn't yet seeing the industry trend making a turn to provide upside to earnings. Hays's strong third-quarter performance in Germany and positive pricing show good momentum, however, which could read-across to Dutch peer Brunel International, Zwartsenburg adds. Both Hays and Brunel shares rise 1%. ([e-mail])

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888 Holdings Seen With Opportunity Despite Challenges

0959 GMT - 888 Holdings' equity story remains challenging, but there are some positive signs for the London-listed online betting-and-gaming company, Goodbody Research's David Brohan says in a research note. "The recovery of 40-50% of Middle East revenues is ahead of our expectations and should be well received. In addition, the reiteration of both FY23 and FY25 guidance is encouraging," Brohan says. The upcoming reform of U.K. gambling laws could also be another positive catalyst for the company, he says. Goodbody Research has a buy recommendation on the stock. Shares trade up 18% at 72.65 pence. ([e-mail])

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Whitbread's 3Q Results Could Prompt Further Outperformance

0931 GMT - Whitbread's remarkable 85.5% occupancy rate in the third quarter provides a platform for further operational, and share price, outperformance, Peel Hunt analysts say in a note. The hospitality company's share price has risen as its strong postpandemic performance recovery clearly becomes sustainable, with Premier Inn's recovery unlike any historical cyclical recovery, the analysts say. Analysts believe its capital-intensive strategy will deliver value over time and raise their rating on the stock to buy from add, and the target price to 4,000 pence from 2,850 pence. "One underpinning for our buy recommendation is the potential for a bidder, with deep pockets, to realize Whitbread's real estate value more quickly," they say. Shares are up 1.6% at 3,064 pence. ([e-mail])

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Superdry Shares Suffer Amid Unconvincing Long-Term Plans

0929 GMT - Superdry shares have fallen back to 2020 lows after the group withdrew its profit guidance for fiscal 2023, blaming the cost of living crisis and bad weather, IG Group PLC chief market analyst Chris Beauchamp says in a note. The stock is a long way off its 2,000 pence pricing of five years ago, with the British clothing brand lacking a clear roadmap for the future, he says. "Superdry has consistently failed to lay out a compelling plan for the longer-term, and it has suffered accordingly," Beauchamp says. Shares are down more than 19% at 86.20 pence. ([e-mail])

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Hays's Strategic Investment Is Paying off

0916 GMT - Hays's impressive third-quarter print highlights the continued return on its strategic investments, says Jefferies in a note after the U.K. recruiter posted a 5% net-fee increase for the three months to March 31 despite moderating momentum in permanent staffing. "In our view, increasingly evident payback on investment in Technology, Engineering and Germany is underappreciated in Hays's discount [enterprise value to net fee] multiple," say analysts Kean Marden and Allen Wells. Its exposure to structural growth markets has substantially improved since the last cycle, they add. Jefferies rates the stock buy. Shares edge up 0.1% at 114.1 pence. ([e-mail])

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Positive Demand Shock in UK May Support Sterling

0842 GMT - Bank of England chief economist Huw Pill said Thursday that the U.K. may be experiencing a positive demand shock from low unemployment supporting consumption, and this should help sterling, ING says. Pill's comments suggest he may not be considering a pause in the BOE's interest rate-rise cycle, ING analyst Chris Turner says in a note. "Here financial markets now price an 80% chance of a 25 basis points BOE hike on May 11." GBP/USD falls 0.1% to 1.2510 after earlier hitting a 10-month high of 1.2548, according to FactSet. EUR/GBP rises 0.2% to 0.8845. ([e-mail])

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YouGov CEO Appointment Looks High Quality

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04-14-23 0713ET