Tuesday newspaper share tips: Inmarsat, Mitie
Markets appear to have punished Inmarsat´s management for providing excessively ambitious financial guidance; however, the share price drop also seems overdone, The Times´s Tempus said.
FTSE 100
8,060.61
15:45 15/11/24
FTSE 250
20,508.75
15:45 15/11/24
FTSE 350
4,453.56
15:45 15/11/24
FTSE All-Share
4,411.85
15:45 15/11/24
Inmarsat
544.40p
07:56 04/12/19
International Consolidated Airlines Group SA (CDI)
240.80p
15:45 15/11/24
Mitie Group
112.20p
15:45 15/11/24
Mobile Telecommunications
1,979.89
16:59 24/01/22
Support Services
10,885.48
15:45 15/11/24
Travel & Leisure
8,607.27
15:45 15/11/24
The shares have come down precipitously from the approximately 1,150p at which they were changing hands at the start of the year.
A fortnight ago, the satellite operator warned of challenging headwinds in its markets but said it expected revenues to grow by 2% this year.
Analysts at Morgan Stanley suggested that might be too ambitious.
Previously, a poor trading update from rival Eutelsat seemed to cast doubts on Inmarsat´s take on recent events.
The worry is that weakness in the global maritime market and in oil and gas are leading to a glut in the satellite market.
Making matters worse, another´s rival´s announcement that it had won a contract with British Airways led some to speculate, wrongly, that Inmarsat had lost out.
"On the assumption that the worst is past and the market is taking too pessimistic a view, that looks like a good entry point for a highly speculative buy," Tempus said.
Mitie is a highly-cash generative business and the stock is trading at a discount to its sector, but market negativity surrounding the outlook for its margins is unlikely to lift soon, The Times´s Tempus said.
The outsourcing company has insisted it can keep its margings at between 5% and 6% but faces challenges on several fronts.
In particular, its healthcare business will be back in profits soon but there was a time when it was called on to be the engine for growth.
A falling pipeline of new work is also a concern, possibly as the uncertainty around the referendum weighs on activity.
Nonetheless, margins in facilities management - which makes up the bulk of its business - was a sufficiently robust 6.3%.
Furthermore, once those uncertainties disappear the order book should return to growth.
The shares also offer an attractive forward divdiend of 4.2% and the shares are on 11 times earnings, which looks low for the sector.
Unfortunately, Tempus concluded, "I do not see those market concerns shifting soon. Avoid."