WINNERS & LOSERS SUMMARY: Recruitment Firms Drop Amid Weak UK Market

Tue, 08th Oct 2019 10:35

(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Tuesday.

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FTSE 100 - WINNERS

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St James's Place, up 2.0%. Deutsche Bank raised the wealth manager to Buy from Hold.

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FTSE 100 - LOSERS

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London Stock Exchange Group, down 5.8%. LSEG said it is making "good" progress on its Refinitiv Holdings Ltd acquisition, shortly after Hong Kong Exchanges & Clearing pulled out of its bid to buy the UK bourse. LSEG noted the announcement by HKEX to not make a formal offer for the group, after initially proposing a potential GBP30 billion takeover offer in mid-September. LSEG initially rejected the offer later that month. At the time of the rejection, LSEG said it saw "fundamental flaws" in the approach, and also noted any combination would come under intense scrutiny from a variety of regulators. On Tuesday, however, HKEX formally announced it had withdrawn its offer to buy the FTSE 100-listed financial exchange operator. HKEX shares closed 2.3% higher at HKD231.20 on Tuesday in Hong Kong.

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FTSE 250 - WINNERS

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Electrocomponents, up 3.5%. The electrical parts distributor said it expects to report 5% revenue growth in the six months to the end of September, thanks to a continued "strong" performance in its Industrial division - this interim growth comprises of 4% in the first quarter and 5% in the second quarter. Geographically, the FTSE 250-listed company reported further growth of 5% and market share gains in Europe, the Middle East and Africa, despite increased macro uncertainty. Turning to Americas, Electrocomponents said improvements in this region - leading to 3% revenue growth in the first half - were driven primarily by sales force initiatives.

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SSP Group, up 1.0%. HSBC raised the travel concessions operator to Buy from Hold.

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FTSE 250 - LOSERS

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PageGroup, down 9.1%. The recruiter said its third quarter was hurt by political and economic uncertainty in its larger markets, including Greater China, the UK and France. For the quarter ended September 30, gross profit was up 4.2% to GBP216.7 million - at constant currency profit was up 2.1%. Third quarter gross profit for Europe, the Middle East & Africa was up 7%, and the Americas region was up 17%. However, in the UK gross profit was down 4.1% and in the Asia Pacific region it was down 4.0%. Chief Executive Steve Ingram said: "Looking ahead, the deterioration in trading conditions seen during third quarter across the majority of our regions is anticipated to continue. In the UK, heightened Brexit related uncertainty is expected to remain as we approach and go beyond 31 October." Fellow recruitment firm Hays was down 6.3%.

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easyJet, down 5.5%. The budget airline said it delivered a "solid" performance in the fourth quarter, continuing to perform in line with expectations. easyJet said it saw "robust" customer demand, with self-help initiatives "driving outperformance" in passenger and ancillary revenue per seat. As a result, easyJet expects headline pretax profit of between GBP420 million and GBP430 million - in the upper half of the airline's guidance range. In the year ending September 30, 2018, the airline recorded GBP578 million in headline pretax profit. "The market appears to have already been expecting EasyJet to issue a fairly bullish statement and so the actual news may not have been as impressive as some investors wanted," commented AJ Bell's Russ Mould. easyJet Chief Executive Johan Lundgren attributed easyJet's increased demand to the "disruption" seen at rivals British Airways and Ryanair Holdings. British Airways is owned by International Consolidated Airlines Group. Fellow airline operators IAG and Ryanair Holdings were down 1.6% and 3.2% respectively.

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TalkTalk Telecom Group, down 3.0%. Societe Generale downgraded the home phone and broadband provider to Sell from Hold.

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OTHER MAIN MARKET AND AIM - WINNERS

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Altyn, up 21%. The gold miner's shares rose following release of a Competent Persons Report for the Sekisovskoye mine in Kazakhstan, revising its resource estimates. The CPR was put together by Ernst & Young Advisory Services, which estimated total ore reserves of 33.5 million tonnes. Proved ore reserves stand at 29.9 million tonnes, containing 3.47 million ounces of gold at a grade of 3.61 grams per tonne, and 5.7 million ounces of silver at a grade of 5.88 grams per tonne. Meanwhile, probable ore reserves was 3.6 million tonnes, containing 330,000 ounces of gold at a grade of 2.91 grams per tonne, and 550,000 ounces of sliver at a grade of 4.81 grams per tonne. The CPR also guided for a net present value of the Sekisovskoye mine at USD415.4 million, up from the USD238.6 million estimated in a CPR published in 2014.

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4D Pharma, up 11%. The pharmaceutical company said it has entered into a research collaboration and option licence agreement with Merck & Co to develop vaccines for gut bacteria. 4D develops "live biotherapeutics" to treat the bacteria found in the human intestine - or gut microbiomes. The development of treatments for gut microbiome, 4D said, leads to treatments for cancer, gastrointestinal disease, respiratory disease and central nervous system disease. 4D said it could receive up to USD347.5 million as part of the deal, if certain option exercises and regulatory milestone payments are met. The deal will also include tiered royalties from the sales of any products created from the collaboration. MSD will be responsible for development, manufacturing and commercialisation following the exercise of any of its exclusive options. Under the deal, 4D's MicroRx platform will be used by MSD in three undisclosed indications, to discover if the drug can be commercialised.

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OTHER MAIN MARKET AND AIM - LOSERS

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Robert Walters, down 7.2%. The recruiter said net fee income growth slowed to 2% at constant currency in the third quarter, as international growth offset a weak UK market. In the first half, Robert Walters reported net fee income jumped 8.6% on a reported and 7% on a constant currency basis after all of its regions delivered growth. In the third quarter, however, net fee income shrank 11% within its home UK market after client and job candidate confidence weakened during ongoing Brexit uncertainty. "The fact that PageGroup and Robert Walters have both warned about major headwinds in the recruitment space and reported a big slowdown in earnings growth shouldn't be a surprise. The large amount of gloomy economic data including deteriorating purchasing managers' indices should give you some very strong clues about corporate confidence. Companies presented with a negative backdrop will think hard about their spending and that includes staff costs," said AJ Bell's Mould.

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By Arvind Bhunjun; arvindbhunjun@alliancenews.com