“A strong showing from Barclays’ share price off the back of its three-year plan wasn’t enough to save the FTSE 100 from falling into the red. Miners dragged the index down on weaker copper prices,” says Russ Mould, Investment Director at AJ Bell.
“Transport group Mobico – formerly known as National Express – dived 7.5% after delaying publication of its financial results. At the root of the problem was an accounting issue relating to its German rail business. Naturally, that has spooked the market and put the share price at a new record low for 2024.
“Domino’s Pizza got a boost from a positive broker note whereby Jefferies upgraded its rating on the stock from ‘hold’ to ‘buy’, citing new management, improved growth prospects and easing cost inflation.
“It might feel as if there is a Domino’s store in just about every major town and city in the UK, but Jefferies is confident it can add a further 360 stores and make money from them. The idea of paying £20 for a takeaway pizza might give some people the chills yet Domino’s has shown there are still ways to shift large volumes even when the economy is going through a more lacklustre period.”
Barclays
“There is a common theme among companies: increase dividends and cut costs to keep shareholders happy. Staff might not appreciate this strategy as it means they may have to do additional work for the same pay, but running a leaner machine is the playbook for corporates when there is an uncertain economic outlook.
“Barclays is the latest to follow this path as it announces yet another business reorganisation, a lower cost-to-income ratio target and a goal to return £10 billion to shareholders via share buybacks and dividends over the next three years.
“The news has gone down well with the market and has helped Barclays’ share price burst back to life after a long period in the doldrums. But will it be enough to protect C. S. Venkatakrishnan’s job? Having a plan is one thing, executing on it is another and so far, the jury is still out on whether he’s capable of turning Barclays around.
“Today’s announcement doesn’t instil confidence as it’s tinkering at the edges, not making radical changes.
“The banking sector got an initial boost from the rising interest rate environment as that created an opportunity to make more money on loans. Yet the sector has lost momentum of late as the market starts to price in interest rate cuts.
“Like many of its peers, Barclays is a big juggernaut of a company where it is very hard to make changes quickly. The investment banking arm continues to stick out like a sore thumb as it isn’t a natural fit to the rest of the business. Appointing four people to lead that division suggests the CEO doesn’t know what to do with it. Too many cooks spoil the broth and the head chef is focused too much on sweet talking and not enough action.”
Intercontinental Hotels
“Holiday Inn-owner InterContinental Hotels continues to demonstrate its recovery credentials as a rebound in global travel is reflected in a strong set of 2023 numbers.
“The shrug with which the market has greeted the company’s first $1 billion-plus operating profit reflects the storming run the shares have been on in recent months as evidence of demand returning to pre-Covid levels emerged.
“People are back on the move post-pandemic for both business and leisure reasons and InterContinental has the right roster of brands to take advantage – with offerings to fit the mainstream, upscale and luxury markets.
“Because InterContinental only owns a small proportion of its hotels and instead focuses on franchising and managing premises it is able to generate strong margins and grow without employing lots of capital. The company is taking advantage of that flexibility as it develops a growing pipeline of new sites.
“It can also focus on more strategic stuff like building up and refining its brands, maintaining good communication with guests and developing sales channels like mobile which now accounts for a much bigger proportion of bookings.
“The company is feeling sufficiently confident to launch an $800 million share buyback and, combined with ordinary dividends, pay out a cool $1 billion to shareholders in 2024.”
These articles are for information purposes only and are not a personal recommendation or advice.
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- Thu, 02/05/2024 - 10:55