FTSE 100 flat after spike in oil, OSB slumps despite buyback, Deliveroo targets positive cash flow in 2024 and Trainline on growth track in UK and Europe

“The FTSE 100 was broadly flat early on as a tick higher in oil prices lifted index heavyweights BP and Shell,” says AJ Bell Investment Director Russ Mould.

“This helped outweigh some big names trading without the rights to their dividend and weakness engendered by fears the move higher in crude, off the back of lower US inventories, might make inflation more stubborn and push back rate cuts.

“Property services firm Savills – a good bellwether for its market – delivered resilient results which nonetheless hinted at the difficult backdrop as it noted lower transaction volumes.

“Housebuilder and regeneration specialist Vistry unveiled better than expected results and notably said it would build more homes in 2024, suggesting its push into affordable housing is paying off.

“The challenge posed by so-called challenger banks is looking more and more feeble as, following Virgin Money’s proposed takeover by Nationwide, OSB reports a substantial drop in profit as its mortgage customers refinance rather than risk an onerous standard variable rate. A £50 million buyback has done very little to cushion the blow for investors.”

Deliveroo

“If Deliveroo can truly deliver positive cash flow in 2024 as it expects then it will be a very significant milestone for a business which came to market racking up losses as it battled Uber Eats and Just Eat Takeaway for supremacy in the food delivery market.

“The tight control of the purse strings demonstrated in 2023, with marketing expenditure materially lower, has come at a bit of a cost. Order numbers were down across 2023 as a whole, hinting at households feeling more constrained in treating themselves to a takeaway and that there may be a price to paid for Deliveroo’s more fiscally responsible approach.

“The shares still languish a long way below their IPO levels, suggesting the company has work to do to convince the market it can prevail against its rivals.

“This feels like a market where being the leader brings with it real benefits and further consolidation in the space cannot be ruled out.”

Trainline

“Rail ticketing platform Trainline is enjoying multi-faceted growth with both its UK and international businesses showing real momentum.

“The company, which makes its money by earning commission and fees on ticket sales supported by ancillary services like insurance, is looking to boost an already dominant market share in the UK.

“The track has been cleared here by the cancellation of a state-sponsored Great British Railways rival platform. The gradual easing of industrial action is also helping here and there is an opportunity to capture people who up until now have continued to buy paper tickets.

“The company is also increasingly targeting the European market where the greater reliability and affordability of rail travel makes for a compelling opportunity. It feels telling that the Madrid-Barcelona route is now the third most popular across all the countries it operates in, including the UK.

“While there are limited barriers to entry Trainline’s established brand and the technology which underpins its site and app would be difficult for a rival to replicate. Innovations like digital season tickets, expensing travel in its app and ‘Strike Safe’ – a feature flagging whether a journey a traveller is searching is likely to be hit by strikes – can help keep travellers loyal.”

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