Oil hits $80 a barrel and Moonpig lifts sales guidance

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“Brent Crude smashed through the $80 per barrel level as the energy crisis worsened. While energy shortages are likely to have a negative impact on economic growth, strength in the oil price was good news for Royal Dutch Shell and BP,” says Russ Mould, Investment Director at AJ Bell.

“Shell and BP are among the biggest constituents of the FTSE 100 and so their share price performance has considering weighting on the direction of the overall index. Their stocks advanced by approximately 2% on Tuesday, making them the top performers after Smiths Group which jumped 3.6% on an update regarding the sale of its medical division.

“Despite Shell and BP moving up, it wasn’t enough to lift the FTSE 100 overall as the index was fighting negative movements from miners, pharmaceuticals and financials.

“A firm takeover offer has finally come for robotic process automation group Blue Prism and it’s less than the market anticipated, leading to a near-3% drop in the share price. A bid battle cannot be ruled out as the company admits it has received multiple proposals in recent months and, as we’ve seen with many other takeovers this year, once the first bid is made then other interested parties start to up their game.

“While considerable investment is required in the business, a would-be suitor taking a long-term view of the sector’s growth prospects might see Blue Prism as a cheaper way to get a foot in the door, given how its US-listed rivals have historically traded on much higher ratings.”

Moonpig

“There is a big sense of relief over Moonpig’s update where it says trading since the start of May has been strong.

“The company was a big lockdown winner with many people unable or unwilling to venture out to shops or supermarkets to buy greetings cards.

“That led to individuals buying personalised cards online for the first time and realising that it is a convenient way of sending messages to friends and family. Not only does it save time by not having to go out and buy the card in the shops, but there’s no need to also buy a stamp and go to the post box.

“Moonpig risked seeing a big drop-off in trading as lockdown restrictions eased and people reverted to the old trend of buying cards in the shops. However, it doesn’t seem as if that has happened, at least not yet. That’s led to upgraded revenue guidance which has subsequently breathed some life into the share price which had been drifting downwards all summer.

“Profit margins are likely to come under pressure as it has been spending more on marketing and developing its technology platform. But one could argue it is spending money now to make more money in the future, so a wise investment.

“The key to Moonpig’s future success will be harvesting data on users and getting them to increase the frequency of purchases and to buy more than just a greetings card. It’s a highly competitive industry but there is scope for further growth as part of the world’s structural shift towards e-commerce.”

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