High street retailer Marks & Spencer Group (LON:MKS) has made this Wednesday’s list of UK share prices to watch, with the group’s shares slumping as the company’s turnaround progress disappointed investors. In mid-caps, privatised Royal Mail Group (LON:RMG) is rallying, with investors welcoming the postal operator’s ‘refreshed strategy’ despite a cut to the company’s payout to shareholders.
M&S and Royal Mail in focus on Wednesday
Marks & Spencer has been one of today’s most notable FTSE 100 fallers as it reported a fall in revenue and profits for the financial year ended March 30. While the falls were expected, investors have reacted negatively to the company’s turnaround plans, as well as the confirmation of a rights issue as the high street retailer aims to finance its recently announced joint venture with online grocer Ocado (LON:OCDO).
M&S “is disappointing on several fronts and the doubts about the turnaround remain,” Neil Wilson of Markets.com commented, as quoted by the BBC, adding that he would still view the retailer’s deal with Ocado “as an expensive entry into a sector – online groceries – that doesn’t make any money”.
“It’s better than standing still but no silver bullet. Exposure to the UK high street is a major drag that won’t get any easier,” the analyst concluded. Marks & Spencer’s shares are at the bottom of the FTSE 100 leaderboard with a near seven-percent fall, as compared with about a 0.4-percent gain in the benchmark index.
SSE (LON:SSE) has been another prominent blue-chip faller as it reported £284.9 million adjusted operating loss, and a 0.32-percent drop in adjusted earnings per share. The blue-chip utility further announced a final dividend of 68.2p per share, taking its full-year payout to shareholders to 97.5p, and flagged a cut to next year’s dividend to 80p per share. SSE’s share price has given up about two percent in early afternoon trade.
Multinational events and publishing company Informa (LON:IKNF) meanwhile is rallying as it announced a portfolio agreement with IHS Markit which will see the FTSE 100 group’s agribusiness intelligence portfolio exchanged for IHS Markit’s leading portfolio of TMT brands, further enhancing blue-chip company’s Informa Tech business. Shares in Informa are changing hands about 1.6 percent higher.
In mid-caps, Royal Mail is rallying after posting a rise in full-year revenue as it benefitted from strong performance at its UKPIL parcels and GLS units, which more than offset the decline in the company’s letter revenue. The company further unveiled its ‘refreshed strategy,’ saying that it was targeting operating profit margin of over four percent in 2021-22, increasing to over five percent in 2023-24. Royal Mail, however, trimmed its payout to shareholders to fund its turnaround programme.
“Investors hungry for yield may be disappointed, but strategically it is absolutely the right move […] today’s strategy update means going all in on parcels – it’s about time,” Markets.com’s Neil Wilson commented, as quoted by Reuters. Shares in Royal Mail are changing hands more than seven percent higher, compared with a flat FTSE 250 index.
Thursday’s UK share prices to watch
United Utilities (LON:UU) is set to continue the water companies reporting season following FTSE 100 peer Severn Trent’s (LON:SVT) results earlier in the week. Proactive Investors quoted Deutsche Bank as commenting recently that water companies’ results should feature double digit earnings growth for each stock”. The analysts meanwhile trimmed their forecasts as they “believe that lower bond yields make a modest cut to the allowed return more likely and with [industry regulator] Ofwat’s incentive packages appearing slightly tougher than expected”.
Support services company Intertek (LON:ITRK) is also due to update investors on its performance tomorrow. Proactive Investors quoted The Share Centre as saying in a preview of the results that the company has been “a steady performer for some years now and nothing too different is expected for the first quarter of the year”, apart from updates on the four acquisitions and investments it made in the period.
“As a company with testing laboratories at ports across the world, it will be interesting to see if the tariff feud between the US and China will lead to any comments by management regarding the impact on trade volumes or any additional expenses relating to administration,” the analysts pointed out.
Investors will also eye annual general meetings at Aviva (LON:AV) and Legal & General (LON:LGEN), while UK share prices set to come under pressure tomorrow on account of companies going ex-dividend include Bunzl (LON:BNZL), Carnival (LON:CCL), DCC (LON:DCC), Imperial Brands (LON:IMB) and Wm Morrison Supermarkets (LON:MRW).
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