FTSE 250 movers: Go-Ahead goes into reverse on Govia warning

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Sharecast News | 14 Jun, 2016

The FTSE 250 index was in the red on Tuesday afternoon as Brexit worries mingled with some disappointing company updates.

Leading faller on the day was transport group Go Ahead, which went into reverse as it warned that its 65%-owned Govia Thameslink Railway joint venture - which operates the Thameslink, Great Northern, Southern and Gatwick Express services - would suffer this and next year.

Chief executive David Brown said while margins at GTR are expected to improve in the longer term, he no longer expects to recover profit shortfalls as a result of a "very challenging performance and industrial relations environment".

"As a result margins, on an adjusted basis, over the life of the contract are now more likely to be nearer to 1.5% than the 3% previously expected.”

Investec was one broker to react, cutting its price target to 2,500p from 2,800p and its medium-term forecasts around 11-12%, almost entirely due to GTR.

Contrasting with its rival, bus and train operator FirstGroup accelerated higher as it reported a rise in full-year profit despite a drop in revenue following the loss of rail franchises.

In its preliminary results for the year to the end of March, FGP said statutory pre-tax profit rose 7.3% from 2015 to £113.5m, despite a 13.8% decline in revenue to £5.22bn. FirstGroup attributed the revenue fall mainly to changes in the rail franchise portfolio, noting the end of the First Capital Connect and First ScotRail franchises.

Low-cost multi-utility supplier Telecom Plus delivered solid final results on Tuesday, with revenue and profit edging higher as expected, but shares were hit by possible investor concerns about a dip in average revenue per user and increased membership churn.

Although its interim results were ostensibly positive, and certainly not surprising, Crest Nicholson was one of several housebuilders to subside as confidence was undermined by continuing Brexit worries. Elsewhere in the mid-cap index, the same effect saw residential property website Rightmove was also gazumped by investors.

Electrocomponents was a surprising faller as the takeover of smaller rival electronic components distributor Premier Farnell for a premium of around 51% to Premier’s closing price on Monday might have indicated positive read-across about further bid in the sub-sector.

Elsewhere, Essentra continued to fall after issuing a profit warnings last week. The plastic, fibre and foam maker said on Thursday that a tough market in filter products and short-term operational problems in the US and UK from its healthcare and personal packaging unit

Deutsche Bank said the warnings "raises questions" and lowered its target price from 860p to 635p but said the reaction in the share price "looked overdone". This did not dissuade investors the next day, who continued to fry the shares to a crisp. Trading at 828p at the close last Wednesday, the shares fell below 600p last week and were down a further 5.5% on Tuesday to around 525p.

Of the few strong risers, clothing designer Ted Baker was striding highest. First quarter sales increased 12.7% as the retailer said it expected full year results to meet expectations. Online sales soared 32.3%, reflecting continued growth across the group's websites.

FTSE 250 - Risers

Ted Baker (TED) 2,485.00p 6.88%
FirstGroup (FGP) 109.40p 6.11%
Allied Minds (ALM) 337.90p 3.59%
Euromoney Institutional Investor (ERM) 964.00p 2.55%
Indivior (INDV) 215.00p 2.38%
Vedanta Resources (VED) 391.80p 1.74%
Evraz (EVR) 123.70p 1.64%
P2P Global Investments (P2P) 855.00p 1.12%
BGEO Group (BGEO) 2,460.00p 1.07%
PayPoint (PAY) 950.50p 1.01%

FTSE 250 - Fallers

Go-Ahead Group (GOG) 2,042.00p -16.07%
Telecom Plus (TEP) 948.00p -7.06%
Crest Nicholson Holdings (CRST) 525.00p -6.25%
Electrocomponents (ECM) 262.10p -5.48%
Stagecoach Group (SGC) 235.60p -5.08%
Rightmove (RMV) 3,914.00p -4.79%
Essentra (ESNT) 530.50p -4.59%
Serco Group (SRP) 107.30p -4.03%
Man Group (EMG) 116.00p -3.97%
NCC Group (NCC) 257.80p -3.95%

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