Sky, Indivior and Barratt Developments

“Stock markets around the world are in the red as investors react to the latest trade war development. Tokyo’s Nikkei 225 index fell 1.2%, Hong Kong’s Hang Seng index was down 1.8% and in the UK the FTSE 100 traded 1.1% lower on Wednesday. “Plans by the US for an additional $200bn of tariffs on Chinese goods has caused investors to lose their appetite for risk and seek solace in more defensive sectors such as consumer goods and utilities,” says Russ Mould, Investment Director at AJ Bell.

SKY

“Sky investors clearly ‘Believe in Better’ as they think a higher offer is coming from Comcast, judging by how the share price is trading well above Fox’s upgraded bid of £14. The takeover saga is far from over.”

Indivior

“Pharmaceutical company Indivior could do with a few headache pills because heads are clearly spinning in the management team.

“Indivior continues to fight rivals who are trying to launch generic versions of its Suboxone opioid addiction treatment despite its patent not expiring until 2024.

“The latest problem is that Dr. Reddy’s managed to get some of its generic product on the market before Indivior obtained a court order in June temporarily blocking the rival’s launch.

“Indivior doesn’t have a clear enough view for how this will impact earnings hence it has gone to the extreme measure of pulling its current financial year earnings guidance.

“This battle is likely to keep going for some time and it will increase pressure on the management team to improve cost cutting plans and raise awareness of its Sublocade injectable drug to suppress opioid craving. This may be an important source of future revenue for the business.

“Unfortunately it has also had to downgrade guidance for this year’s sales of Sublocade due to various issues. Effectively this means its contingency plan to cushion earnings in case of Suboxone disappointment hasn’t worked out as planned. If plan A and plan B have failed, the big question is therefore what is plan C?”

Barratt Developments

“This latest update from Barratt Developments has a notably more positive tone than recent messaging from its peer group in the housebuilding sector as the company points to record annual profit.

“The question is whether Barratt is genuinely performing better than its rivals, or if the latter are doing a better job of managing expectations.

“Barratt’s average selling price is up a healthy 5% to £289,000 and there is a material increase in the number of housing completions.

“Something for investors to bear in mind is that Barratt would be particularly vulnerable if growth in its average selling price stalled. This is because it already has lower margins.

“And, while the numbers to 30 June 2018 look set to be strong, the medium-term guidance given when the company publishes these results in full on 5 September may be more helpful in forming a view on the stock’s prospects.”

These articles are for information purposes only and are not a personal recommendation or advice.