Hikma Pharmaceuticals Share News (HIK)

LONDON (Alliance News) - London stocks were mixed Monday midday, after broadly positive manufacturing Purchasing Managers' Index readings from several European countries and the UK, while ahead of the same from the US, shares in New York are called for a slightly positive open.

The FTSE 100 index was down 0.4% at 6,337.19 points, the FTSE 250 was up 0.1% at 17,129.22, while the AIM All-Share was up 0.4% at 740.69. In Europe, the CAC 40 in Paris was up 0.5% and the DAX 30 in Frankfurt was up 0.9%.

UK manufacturing activity expanded at the fastest pace in sixteen months in October, as output and new order growth accelerated, figures from the Chartered Institute of Procurement & Supply and Markit Economics showed Monday.

The seasonally adjusted PMI climbed to 55.5 in October from 51.8 in September, which was revised up from 51.5. Economists had expected the index to fall slightly to 51.3. Any reading above 50 indicates expansion in the sector.

The latest rate of growth was one of the steepest registered during the 24-year survey history. October saw solid improvements in the rates of growth in output and new orders, while new export orders gained for the second successive month, helped by improved intakes of new work from clients in the Middle East, East Asia and the USA.

"The start of the final quarter saw UK manufacturing spring back into life and record its best month of factory output growth since June 2014," said Rob Dobson, senior economist at Markit. "The revival provides a tentative suggestion that the manufacturers are pulling out of their recent funk, having been dogged by recession since the start of the year, and may help boost economic growth in the fourth quarter."

Following the data, the pound rose to USD1.5463, after being at USD1.5426 prior.

Meanwhile, in Europe, data from Markit also showed that eurozone manufacturing activity growth came in above estimates in October. The manufacturing PMI rose to 52.3 in October from 52 in September. The reading was above the flash score of 52.

Germany's manufacturing PMI slid to a three-month low of 52.1 in October from 52.3 in September as production and employment growth slowed. The flash reading was 51.6.

The French manufacturing PMI remained unchanged at 50.6 in October. It was slightly below the flash score of 50.7. Output increased for second month.

Investor focus now will to turn to the US, with Markit manufacturing PMI expected at 1445 GMT, while the Institute for Supply Management manufacturing PMI is at 1500 GMT, alongside US construction spending.

Wall Street was called for a higher open, with the Dow 30, the S&P 500 and the Nasdaq 100 all pointed up 0.1%. Wall Street ended lower Friday, with the Dow and S&P down 0.5% and the Nasdaq Composite down 0.4%.

As the US earnings season continues, US payments company Visa reported fourth-quarter net income of USD1.5 billion or USD0.62 per share, an increase of 41% and 44% over the prior year, respectively. Recently London-listed payments processing company Worldpay Group said it will sell its stake in Visa Europe to Visa in a deal worth EUR1.25 billion to Worldpay. Worldpay will, however, only retain 10% of the total consideration for the stake, with the other 90% to be paid to holders of contingent value rights, a separate class of share in Worldpay.

In London, Hikma Pharmaceuticals was the worst blue-chip performer, down 5.1%. It said trading across the majority of the business has been solid in 2015 but said its Generics division is performing below expectations due to slower-than-expected colchicine sales growth.

The company said it has seen continued strong demand for its legacy products within the Generics business, with any declines in line with its expectations due to greater competition. But colchicine, its gout treatment, has suffered due to Hikma having to sell the drug under both the Mitigare brand name and as an authorised generic version.

This 'hybrid' brand strategy has meant growth in sales of the drug has been "more gradual" than expected, Hikma said, and it has cut its revenue guidance in the Generics business to USD150.0 million for the full year, down from USD175.0 million to USD200.0 million previous.

Catering and outsourcing company Compass Group was down 3.0% after being downgraded to Underperform from Neutral by Credit Suisse, while FTSE 100-listed airline easyJet was down 2.3% after HSBC cut its recommendation to Reduce from Hold.

Shares in Irish budget carrier Ryanair Holdings were up 2.6% in London, after it said it expects its full-year net profit to be at the top end of its expectations, as it raised its passenger traffic target following increases in revenue, post-tax profit and customer numbers in the first half.

Thanks to the strong performance in the half, Ryanair raised its financial year 2016 traffic target to 105.0 million customers, up from 104.0 million previously, based on expectations for higher load factors in the second half and a forecast for traffic to grow 17% in the third quarter and by 22% in the fourth quarter.

"This is a strong first half update, although the weaker recent pricing expectations for the fourth quarter of 2016 may cause some concern and, as per other airlines' results last week, the outlook is marginally softer than the reported figures," said Nomura. "We retain a more cautious view into higher winter capacity from the market leaders. However, market demand and improving macroeconomic conditions support both our Buy rating on Ryanair and Bullish sector stance."

In the FTSE 250, Crest Nicholson was among the best performers, up 2.2% after JPMorgan Cazenove upgraded the housebuilder to Overweight from Neutral. The broker said the Crest Nicolson trades "at a relative discount to where we would expect it to."

"Given the group's exposure to strong end markets in the South East, relatively long land bank and history of high quality execution, we struggle to justify this discount," noted JPMorgan.

JPMorgan said it expects 2016 to be "another year of improved profitability and strong operating conditions for the UK housebuilders", saying that it sees "little risk either of either earnings downgrades, or of news flow that would meaningfully impact expectations for longer-term returns."

In AIM, LPA Group was the top gainer, up 30%. The company, which provides lighting and electro mechanical systems to the transport industry, said it has seen a significant improvement in trading in the second half, following a tough first half, and now anticipates its full-year results will outpace market expectations.

LPA said it has seen much stronger trading in the second half, with previous problems it had faced on the fabrication capability of its electro-mechanical facility, now largely overcome.

At the other end of the index, Caza Oil & Gas was down 26%. The oil and gas company said it has secured another extension to its financing arrangement with Apollo Investment, as the company continues to be in breach of the covenants of the deal.

Caza said Apollo executed a Forbearance and Reservation of Rights Agreement under which it has restrained from executing its rights under its lending agreement with Caza, after the AIM-listed oil and gas company failed to meet the covenants on the agreement ahead of previous deadlines. The agreement had previously been extended to October 31 but has now been pushed on to November 30.

By Daniel Ruiz; danielruiz@alliancenews.com

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