FTSE 250 movers: Mediclinic ails, Sophos secures a raise

Mediclinic was under pressure after a trading update revealed weaker revenues from the Middle East, lower admissions in South Africa and softer margins in Switzerland.

First half results are below guidance on Switzerland margins, analyst Morgan Stanley noted. "Mediclinic is now guiding for full year margins of 16%, well below ours and consensus (and previous guidance) of 17.3%. The company is non-commital about whether this is the trough."

Following the update, Spire Healthcare, in which Mediclinic holds a 29.9% stake, also lost ground.

After hearing from Mediclinic's management, analysts at Barclays updated clients on the Spire situation: "Whilst they believe there is short-term uncertainty in the UK market, they believe it has attractive long-term opportunities. They added here that they are 'evaluating all options', that they are 'not a logical portfolio holder of companies' and that they look to own 100% or 0%."

Car distributor and retailer Inchcape tumbled after HSBC slashed the price target on the hold-rated stock to 650p from 840p as UK total industry volume of new cars fell by 20.5% in September. A note from HSBC pointed out that UK VW and Audi total industry volume fell 53-55% in September, a crucial factor as it estimated that the two car brands comprised approximately 30% of Inchcape's new car sales in the country.

IT infrastructure provider Softcat was under the cosh even as a strong update, which showed strong growth in revenue and profits and sustained cash generation for the period, fell short of lofty market expectations. The company's revenue was up 29.9% at £1.08bn, with gross profit rising 28.5% to £175.2m, customer numbers increasing by 4.7% to 11,900 and gross profit per customer growing 22.8% to £14,700.

Jefferies reiterated its 'hold' rating for the company's shares with a target price of 790p, up from 760p. "A modestly ahead set of results rounds-off a significant year of growth for Softcat. The company acknowledges that its FY18 performance benefited from exceptionally strong market conditions. Nevertheless, management remains confident of delivering profitable growth in FY19E. As such, our forecasts are largely unchanged," said the broker.

International transport group Stagecoach also dipped after being cut to 'hold' at HSBC, with a price target at 170p.

Crest Nicholson dropped after it warned that full-year profits will be lower than expected, while margins will be below previous guidance as it announced the departure of its chief financial officer. Crest now expects pre-tax profit for the year to the end of October to come in between £170m and £190m, which is below the £207m reported last year and consensus expectations of £204m.

Broker Shore Capital said the issue is the same as in previous warnings, namely a very tough market at higher price points, especially beyond the limits of help to buy, and problems completing sales where buyers also need to sell a house in the second hand market. "The problem is really one of affordability although the industry is keen to blame Brexit," said analyst Robin Hardy, noting that Bellway earlier in the week acknowledged that Brexit actually barely registers outside London, "so we still believe that that is not the core of the issue for the house builders but a raw lack of affordability".

Meanwhile at the other end of the scales, security software and hardware firm Sophos was the top riser after being boosted by an initiation at 'buy' from Liberum, with a target price of 530p. Analysts from the broker stated that the company's shares have struggled in the year to date due to a perception of competitive pressures and a disappointing first-quarter billings growth rate.

"However, the company has a leading cloud platform which combined with top-performing products can drive cross-selling into existing and new customers. We expect billings to return to fast growth in the second half, and the midterm guidance of circa $1bn in billings remains deliverable," said a note from the broker.

Power station company Drax was on the increase after Credit Suisse upped its target price for the company's shares from 410p to 420p following the company's Tuesday announcement of its purchase of Scottish Power's pumped storage hydro and gas-fired generation portfolio.

The 2.6 gigawatt portfolio is expected, based on recent power and commodity prices, to generate earnings before interest, tax, depreciation and amortisation in a range of £90m-£110m from gross profits of £155m to £175m across 2019.

Finally, plastics and fiber product supplier Essentra climbed after Peel Hunt reiterated its 'buy' rating in a note on Wednesday.

Market Movers

FTSE 250 (MCX) 19,060.36 -0.47%

FTSE 250 - Risers

Sophos Group (SOPH) 494.14p 4.38%
IntegraFin Holding (IHP) 331.00p 3.44%
Drax Group (DRX) 397.84p 3.07%
Renishaw (RSW) 4,262.00p 2.40%
Lancashire Holdings Limited (LRE) 577.50p 2.21%
Entertainment One Limited (ETO) 427.80p 1.86%
Man Group (EMG) 143.20p 1.85%
Great Portland Estates (GPOR) 685.10p 1.84%
Polar Capital Technology Trust (PCT) 1,219.60p 1.80%
Essentra (ESNT) 386.00p 1.63%

FTSE 250 - Fallers

Mediclinic International (MDC) 393.00p -17.21%
Inchcape (INCH) 540.50p -12.33%
Softcat (SCT) 721.76p -8.75%
Stagecoach Group (SGC) 146.30p -6.34%
Spire Healthcare Group (SPI) 120.78p -5.94%
Just Group (JUST) 78.95p -5.39%
WH Smith (SMWH) 1,784.00p -5.26%
Crest Nicholson Holdings (CRST) 308.20p -4.58%
Thomas Cook Group (TCG) 44.14p -4.54%
Electrocomponents (ECM) 628.00p -4.44%