BOE's Inflation Outlook Seen Posing Risk to Pound -2-

1048 GMT - Mission Group's 2022 trading was resilient and its new growth targets are significant, Shore Capital says in a note. The U.K. marketing company issued an "eye-catching" operating income target of GBP100 million by 2025, with a margin performance trending to 13%, Shore says. "Today's results detail another year of delivery from TMG and a firm reiteration of its growth focus, reinforcing our long-standing view that it is a well-managed business offering investors a range of fundamental attractions," analyst Roddy Davidson says. Shore has Mission Group as a house stock. Shares rise 3.8% at 55 pence. (elena.vardon@wsj.com)

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Stronger Household Finances Protect Against Financial Crisis Scenario

1000 GMT - Similarities between current banking turmoil and the lead-up to the 2008 global financial crisis are becoming too big to ignore, but key differences, including stronger household finances, make a reprise unlikely, Tamara Basic Vasiljev, senior economist at Oxford Economics says in a note. House prices, which rose dramatically over two pandemic years, are now declining in most advanced economies, and mortgage rates, which have raised to unprecedented rates in recent months, are also reversing course, Vasiljev says. Moreover, households are now in much stronger financial positions, with lower loan-to-value and debt-to-income ratios and much healthier savings, she says. That cushions the sector from real-estate shocks in a way they didn't in the GFC era, plus the labor market this time looks more resilient, she adds. (edward.frankl@wsj.com)

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Eleco's Beat to 2022 Profit Forecast Drives Upgrades

0947 GMT - Eleco's beat to earnings and profit drives upgrades to 2023 and 2024 forecasts, finnCap analyst Lorne Daniel writes in a research note. The construction and building software company booked 2022 Ebitda, EBIT, pretax profit and EPS--all on an adjusted basis--ahead of finnCap's forecasts. As a result, Eleco's adjusted pretax profit is now expected to rise to GBP3.8 million in 2023, from GBP3.6 million in 2022, the U.K. brokerage says. As visibility has improved, finnCap now also forecast FY 2026 sustained double-digit revenue growth, rising margins and above GBP9.0 million in adjusted Ebitda in FY 2026. Adjusted Ebitda in 2022 was GBP5.4 million. Shares are up 2.6% at 78 pence. (christian.moess@wsj.com)

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Petershill Partners' Fee-Related Guidance Looks Disappointing

0943 GMT - Petershill Partners' guidance on partner fee-related earnings for 2023 of between $220 million and $250 million is disappointing, says UBS in a note after the investment firm posted a 2022 performance-driven revenue beat. "We would expect a neutral response to the results. While the earnings per share and dividend per share beat and the $50 million of buyback announced are both positives, the Partner FRE miss and the lower 2023 guidance on Partner FRE are negatives," analysts at UBS say, referring to the metric Petershill uses for income drawn from management fees. The Swiss bank rates the stock buy. Shares edge up 0.9% at 151.8 pence and have lost 10.2% YTD. (elena.vardon@wsj.com)

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Mortgage Advice Bureau's Market Share Boost Shows Upside

0930 GMT - Mortgage Advice Bureau's "ballooned" market share underpins future prospects, Peel Hunt says in a note after the U.K. property-letting company posted 2022 results in line with views. The brokerage notes the company's new mortgage-lending market share of 7.5% in 2022 implies a second-half market share of 8.2% with an impressive 9% fourth-quarter market share exit, which validates management's view that share rises fastest when the mortgage market is slow. "The investment case has stabilized and the medium-term opportunity is increasing as market share rises," Peel Hunt says, pointing to a positive trend in structural drivers despite cyclical factors affecting short-term results. The brokerage has a buy rating on the stock. Shares are up 1.6% at 630 pence. (elena.vardon@wsj.com)

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Diageo's Leadership Change Looks Unlikely to Rock Boat

0926 GMT - Shares in Diageo drop 0.6% after the maker of Johnnie Walker whisky and Smirnoff vodka said chief executive Ivan Menezes was stepping down. Diageo's decision to replace Menezes with its chief operating officer Debra Crew--rather than appointing an external candidate--theoretically lowers the chances of a radical shift in strategy, AJ Bell says. "The market reaction shows investors aren't worried about big changes to the business," Bell's investment director Russ Mould writes, adding that the transition looks like it will be smooth. (philip.waller@wsj.com)

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Ocado Drops After Reporting Continued Tough Trading

0906 GMT - Ocado Group falls 3% after the online grocer and retail-technology specialist's joint venture with Marks & Spencer said trading in the 13 weeks to Feb. 26 remained tough. Ocado Retail said its average basket value was flat, average basket size fell 7.5% and order frequency returned to pre-pandemic levels. Order frequency came in below RBC Capital Markets's expectations while basket value was above, RBC says. While Ocado's technology is industry-leading, the group's mid-term targets look ambitious given its cash-flow potential, the Canadian bank says. "Moreover, risk of additional financing, an uncertain recovery at Ocado Retail, downside risk to group estimates, a lower probability of further game-changing international deals and a relatively rich valuation drive our under-perform rating," RBC analysts write. (philip.waller@wsj.com)

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Bellway's Strong 1H Results, Guidance Likely to Mean Upgrades

0905 GMT - Bellway delivered a solid first half with completions in line with the prior year and selling prices slightly ahead, and with its fiscal 2023 guidance reiterated there are likely to be moderate upgrades to market expectations, Peel Hunt says. The house builder's demand has increased steadily over the year, aided by stabilization in mortgage rates, and it is well-placed to deliver 11,000 homes this year, Peel Hunt analysts Sam Cullen and Clyde Lewis write. "With the shares trading at a 30% discount to tangible net asset value, the company continues to look too cheap to us and we reiterate our Buy recommendation," they say. Peel Hunt retains its 2,660 pence price target on the stock. Shares are down 0.7% at 2,026 pence. (joseph.hoppe@wsj.com)

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Sterling Could Extend Gains Vs Dollar on BOE-Fed Divergence

0904 GMT - Sterling could extend its gains against the dollar as the Bank of England and Federal Reserve's signals about future monetary policy diverge, ING says. BOE Governor Andrew Bailey sounded "relatively hawkish" in remarks Monday as he said the U.K. banking system was in a sound position and further interest rate rises were possible if inflationary pressures persist, ING analyst Francesco Pesole says in a note. The Fed is comparatively more cautious in its signals about future policy amid banking sector stress, he says. "With BOE rate expectations now supported, we think GBP/USD can head towards the key 1.2426 (December high) and 1.2500 resistances on the back of USD weakness and policy divergence relatively soon." GBP/USD rises 0.1% to 1.2297. (renae.dyer@wsj.com)

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Bellway Delivers Solid 1H Results and Strong Returns

0901 GMT - Bellway's first-half results were solid with a sustained improvement in reservations since January, underlying operating profit broadly in line with market expectations and a GBP100 million share buyback, Goodbody says. The house builder's demand continues to improve, fiscal 2023 guidance has been reiterated and the shares now offer a double-digit capital return yield following the buyback announcement, Goodbody analyst Shane Carberry says in a research note. "This should be more than enough for a stock trading at a 30% discount to its fiscal 2023 book value," the Irish brokerage says. Goodbody retains its buy recommendation on the stock. (joseph.hoppe@wsj.com)

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Diageo's New CEO Should Bring Evolution, Not Revolution

0846 GMT - Diageo CEO Ivan Menezes's retirement was expected, but earlier than anticipated, Citi analysts say in a note. The leader of the London-based maker of Guinness stout and Smirnoff vodka was expected to step down at end-December, they say, adding that the appointment of Debra Crew to the position is no surprise. "It is too early to say what strategic changes Debra may make to the business in the future, but we believe the strategy will be one of evolution not revolution-for now." Mr. Menezes lead the group through a successful transformation into an attractive, compounding-growth stock with shareholder returns, the analysts add. (michael.susin@wsj.com)

Contact: London NewsPlus; paul.larkins@wsj.com

(END) Dow Jones Newswires

March 28, 2023 07:09 ET (11:09 GMT)

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