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FTSE 250 movers: Drax 'is cheap', Hastings growth slows
The FTSE 250 was on the front foot on Thursday, with Drax and Domino's Pizza on the up and Hastings on the downside.
The Yorkshire coal and biomass power plant operator benefitted from a BoA Merrill Lynch upgrade to 'buy' with a 425p target price on the back of potentially cheaper biomass feedstock. With most of Drax's profit supported by long-term government subsidies, analysts said the group can invest for growth or cash returns.
"We think Drax is 40% cheap in our central scenario, which is conservative. The shares could double in a blue-sky outcome. Risk is asymmetric and heavily skewed to the upside, with strong cash generation driving a free cash flow yield of 15% from 2019."
FDM mounted a steady rise as the session wore on after reporting first-quarter trading in line with expectations as the IT services and recruitment company shifted towards higher-margin business. The FTSE 250 company said group revenue fell 1% in the three months to the end of March but was up 3% excluding currency swings.
FDM employs freelance contractors and a growing army of its own consultants, known as Mounties, who are loaned out to clients such as banks and other companies with direct IT support. On 23 April the number of Mounties on client sites rose to 3,310 from 2,826 a year earlier and revenue from the Mountie programme rose 13%, or 17% at constant currency
Domino's Pizza was higher as it served up an 18.3% jump in first-quarter sales to £311.1m, with international sales up 17.6% to £25.6m. Chief executive officer David Wild said good growth had continued in all markets. "In the UK, customers are responding very positively to our clearer value proposition, with strong scores for value for money and overall satisfaction."
He added: "I am encouraged by our international operations, which are gaining scale as more customers grow to love our [...] pizzas."
Insurer Hastings slumped as first-quarter growth in gross written premiums slowed and bad weather pushed up claims costs.
In the quarter to the end of March 2018, gross written premiums were up 5% to £226m, while live customer policies rose 10% on the year to 2.67m and the company's market share of UK private car insurance rose to 7.4% from 6.7% as at 31 March 2017. Net revenue increased 12% in the three months to £184.5m.
Shares in several companies went ex-dividend, including Relx, William Hill, National Express and International Public Partnerships.
Market Movers
FTSE 100 (UKX) 7,409.16 0.40%
FTSE 250 (MCX) 20,111.50 0.46%
techMARK (TASX) 3,406.38 0.63%
FTSE 250 - Risers
Drax Group (DRX) 319.80p 8.63%
Hikma Pharmaceuticals (HIK) 1,264.00p 3.73%
Melrose Industries (MRO) 224.00p 3.70%
Ocado Group (OCDO) 522.80p 3.65%
Wood Group (John) (WG.) 565.80p 3.40%
FDM Holdings (FDM) 1,012p 3.37%
Cranswick (CWK) 2,948.00p 2.93%
Pennon Group (PNN) 685.00p 2.76%
TalkTalk Telecom Group (TALK) 127.90p 2.65%
Domino's Pizza UK (DOM) 355.20p 2.62%
FTSE 250 - Fallers
Vietnam Enterprise Investments (DI) (VEIL) 448.00p -3.24%
Lancashire Holdings Limited (LRE) 584.00p -3.15%
National Express Group (NEX) 391.40p -3.12%
Hastings Group Holdings (HSTG) 271.20p -2.87%
Renewi (RWI) 73.20p -2.40%
Ascential (ASCL) 406.20p -2.36%
Contour Global (GLO) 256.00p -2.29%
Alfa Financial Software Holdings (ALFA) 344.00p -2.27%
International Public Partnerships Ltd. (INPP) 144.00p -2.17%
Fisher (James) & Sons (FSJ) 1,636.00p -2.15%