Low-cost airline easyJet (LON:EZJ) has expectedly been one of today’s UK share prices to watch this Friday, after updating investors on its interim performance. Just Eat (LON:JE) meanwhile has tumbled to the bottom of the blue-chip leaderboard after Sky News reported that Amazon was about to make an investment in rival Deliveroo.
easyJet flies higher, Just Eat tumbles
easyJet is rallying even as it disclosed this morning that its headline loss before tax had widened to £275 million in the first half of its financial year, compared with an £18-million loss in the prior-year period. The airline, however, reassured investors that its headline profit before tax expectations for the financial year 2019 remained unchanged and in line with expectations.
“In line results and an unchanged FY profit outlook mask more concerning trends,” Liberum commented, as quoted by Proactive Investors, adding that the airline’s first-half showed a ‘significant deterioration’ against a tough comparative, as expected, and weaker guidance on unit revenue was balanced against an improved non-fuel cost outlook. The broker, however, expects “attention to focus on the weaker revenue and the cut to 2020E capacity growth points to caution beyond the short term”. easyJet’s shares are currently trading about 3.70 percent higher, compared with about a 0.4-percent fall in the Footsie.
Just Eat meanwhile is in the doldrums as it emerged that US e-commerce giant was set to invest in rival Deliveroo.
Proactive Investors quoted Liberum as commenting that Amazon’s investment in Deliveroo would raise concerns over the FTSE 100 group’s business model. The broker, however, reaffirmed its ‘buy’ rating and price target of 1,360p on the stock, saying these concerns were ‘overdone’ as despite Amazon’s backing for Deliveroo, Just Eat’s dominant market position would be “incredibly difficult to overcome, especially given its strength in smaller towns”.
City A.M. quoted Peel Hunt commenting that that the Amazon investment in Deliveroo, coupled with Uber’s initial public offering (IPO) last week, increased the pressure on Just Eat.
“After Uber’s IPO last week that raised $8.1 billion and now Amazon’s investment today – both in aid of the more expensive delivery side of the takeaway market – these two FAANG(U)s will put more pressure on Just Eat which has only recently started out on that journey,” the broker reckons. Shares in Just Eat are changing hands more than seven percent in early afternoon trade.
The Sage Group (LON:SGE) is underperforming the broader market as the software company announced that its organic operating profit had fallen in the six months ended March 31. The group, however, said that its full-year outlook showed “continuing confidence in recurring revenue growth in the remainder of FY19”. Sage’s stock is about 1.3 percent worse off intraday.
Investors are also reacting negatively to Hikma Pharmaceuticals’ (LON:HIK) trading update, with the company noting that it expected increased competition on its marketed portfolio, which the generics drugmaker expects to partially offset with market share gains and new product launches. The company, however, reaffirmed its full-year guidance. Hikma’s shares are more than three percent lower.
In mid-caps, shares in Thomas Cook (LON:TCG) are in free fall again as Citi turned bearish on the troubled tour operator which revealed a wider loss before tax yesterday and warned over second-half earnings. Sharecast quoted the broker as commenting that the group’s FY18 net debt of around £750 million implied ‘zero equity value’.
“We fear that news of the £1bn write-down and the ‘material uncertainties’ comment from the auditors will unsettle consumers and drive further weakness in bookings,” the broker elaborated. Thomas Cook’s shares are trading more than 35 percent lower today.
UK share prices to watch next week
Next week’s UK share prices to watch include water utilities Severn Trent (LON:SVT) and United Utilities (LON:UU), as well as high street retailer Marks & Spencer Group (LON:MKS), which is set to post full-year results. The retailer’s update will come after the company inked a joint venture deal with Ocado (LON:OCDO).
“At a time when M&S is set to begin its online journey with Ocado, we think the fierce competition it will face from the likes of Waitrose, Amazon Pantry, Farmdrop, and Tesco to name just a few means that margins will be pressured as customers are acquired in any way possible (perhaps through reduced prices, or delivery proposition investments) to grab share in a growing market,” Liberum commented in a note to clients, as quoted by Proactive Investors.
With the annual general meeting season in full swing, companies including energy giants BP (LON:BP) Royal Dutch Shell (LON:RSDA), copper miner Antofagasta (LON:ANTO) and blue-chip insurer Aviva (LON:AV) are set to meet investors next week.
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