Vodafone slipped after its 70 per cent owned Southern African business Vodacom posted much weaker than expected quarterly results, due to a summer promotion backfiring.
Vodacom said group revenue grew just 1.5 per cent for the fiscal third quarter, rather than the 3.5 per cent expected by the consensus. The group withdrew its Summer Gigs promotion in November but warned that because of a regulatory change due in March, the after effects would drag on data revenue growth “in the near term”.
For Vodafone, Vodacom’s weak performance could take 30 basis points off the expected 0.3 per cent growth in the fiscal third quarter or between €30m and €40m on a group revenue base of €9.8bn, said Macquarie.
Blue Prism, the process automation software maker, edged lower after raising £100m before expenses with a share placing to fund its global growth ambitions. It sold the new stock at a 5.2 per cent discount to Wednesday’s close.
Full-year results from Blue Prism showed an underlying adjusted £21.6m loss on revenue up 125 per cent to £55.2m, which matched market expectations. For the full year 2020 the company guided towards a better than expected £154m in revenue.
Merrill Lynch said the cash call was “the right step to ensure Blue Prism’s competitive position remains strong”. Losses will accelerate again in 2019, “but our view has always been that enterprise software companies trend toward strong margins”, it said.
Sellside stories
Jefferies downgraded Reckitt Benckiser to “underperform” from “hold”.
The surprise retirement of Rakesh Kapoor, Reckitt’s chief executive, last week “crystallises long-brewing anxieties”, said Jefferies analyst Martin Deboo. “There are strong runners and riders for the role aplenty. But this is a challenge beyond mere fresh legs. The unique RB pay-for-performance model, so powerful for so long, is now under pressure, laying bare the fact that RB has the weakest culture and workstyle ratings in the peer group.”
Being beaten by GlaxoSmithKline in the race to buy Pfizer’s consumer healthcare division might have prompted Mr Kapoor’s decision, said Jefferies. Not only does the miss leave Reckitt in strategic stalemate, it cuts off a vital source of fresh innovation for a healthcare portfolio overly reliant on Mucinex and the “yeoman infantry” of Nurofen, Strepsils and Gaviscon, it said. And with Reckitt’s divisional margins already at or near the top of their peer groups, “the forces of profit gravity must come into play eventually,” Jefferies said. “Now feels like it might be that moment.”
Jefferies forecast Reckitt to miss consensus earnings per share for 2019 by 6 per cent. It saw the planned spin-off of Reckitt’s hygiene and homecare arm as a potential support for the stock but added that upside looks uncertain, given full separation is not expected until mid 2020 and the only likely buyers would be private equity.
In brief: Adidas cut to “underweight” at Morgan Stanley; Austrian Post upgraded to “outperform” at RBC; Auto Trader downgraded to add at Peel Hunt; Banco BPM cut to “hold” at HSBC; Barry Callebaut upgraded to “neutral” at Goldman Sachs; Crest Nicholson cut to “neutral” at Redburn; Daily Mail upgraded to “hold” at Liberum; Delivery Hero downgraded to “neutral” at JPMorgan; Derwent London raised to “hold” at HSBC; Euromoney downgraded to “add” at Peel Hunt; Hapag-Lloyd upgraded to “hold” at HSBC; Huntsworth raised to “buy” at Peel Hunt; LafargeHolcim downgraded to “sell” at UBS; Metro Bank cut to “sell” at Citigroup; Moncler upgraded to “buy” at UBS; Michelin cut to “underperform” at Exane BNP Paribas; Moneysupermarket downgraded to “add” at Peel Hunt; Nestlé upgraded to “buy” at Berenberg; Sanne raised to “buy” at Citigroup; YouGov upgraded to “buy” at Peel Hunt.
