10th Apr 2024. 8.57am

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Auto Trader drop on downgrade

Auto Trader (AUTO) experienced its largest one-day percentage drop since October 2022 following a downgrade from JP Morgan.

Analysts from the US investment bank have adjusted their price target for Auto Trader down to 608p from 623p. They attributed this adjustment to challenging conditions in the automotive retail market.

JP Morgan anticipate ongoing difficulties in 2024, particularly with higher-than-expected losses in Autorama, which could negatively impact earnings expectations for fiscal year 2025.

JP Morgan expressed caution due to a potentially softer consumer environment, challenges in the digital retail rollout, and difficult dynamics among retailers. Despite this, the average rating from 19 analysts on AUTOA is “buy,” with a median price target of 714.50 pence, according to the London Stock Exchange Group.

We have had a good run on Auto Trader and will be looking for the shares to hold at support in the coming weeks.

AUTO Daily Candle Chart

AUTO Daily Candle Chart

BP production up in Q1 2024

In the first quarter of 2024, BP (BP.) reported an increase in its oil and gas production. However, the energy giant expects to face challenges due to lower crude and gas prices.

The drop in crude prices is projected to reduce profits by $0.3-$0.6 billion, while lower gas prices could further decrease profits by $200-$400 million.

Despite these anticipated challenges, BP remains optimistic about the performance of its gas marketing and trading segments. Additionally, refining margins have improved, providing a boost of $0.1-$0.2 billion.

During the quarter, the Whiting refinery experienced a power outage, impacting operations. However, the refinery has since resumed normal functioning.

Although oil trading faced difficulties in the fourth quarter of 2023, BP expects a rebound in this area.

Net debt is expected to increase, primarily due to a working capital build-up and phased capital expenditure and divestment.

In terms of market prices, Brent averaged $83.16 per barrel in the first quarter of 2024, down from $84.34 per barrel in the previous quarter. Similarly, US Henry Hub gas averaged $2.25 per mmBtu, compared to $2.88 per mmBtu in the previous quarter.

The market’s response to BP’s numbers have been positive with the shares continuing to build momentum.

BP. Daily Candle Chart

BP. Daily Candle Chart

Centamin reports strong FY23 results and optimistic outlook for 2024

Centamin (CEY) reported increased gold production and reduced all-in sustaining costs (AISC) in full year 2023 (FY23).

CEO Martin Horgan highlighted the company’s consistent delivery on production guidance for the third consecutive year, citing operational improvements and flexibility from a reinvestment plan. Despite local inflationary pressures, AISC decreased by $194/oz compared to 2022, positioning Sukari for long-term growth with a target of 500,000 ounces annually.

In terms of safety, Sukari achieved 9.5 million work hours with zero lost-time injuries, showing significant improvement in injury frequency rates. Additionally, the company made progress in reducing greenhouse gas emissions, primarily through solar power generation.

Financially, Centamin reported increased gold production, adjusted earnings (EBITDA), and profit after tax. Capital expenditure was below guidance due to cost savings and equipment rebuild changes. The company maintained a strong balance sheet with increased liquidity and declared a final dividend of 2.0 US cents per share.

Looking ahead to 2024, Centamin maintains its guidance for gold production and cost metrics. Key milestones include completing the Doropo Project’s definitive feasibility study, advancing exploration programs, and progressing the grid connection project at Sukari.

The stock has performed well and was one of our tips for ISA season 2024, and we’re very happy that we snapped up a second tranche in December 2023.

CEY Daily Candle Chart

CEY Daily Candle Chart

JD Sports projects FY25 profit before tax of £900-980m

JD Sports (JD.) issued a trading update for FY24, indicating an outperformance despite market challenges.

CEO Régis Schultz highlighted the company’s strong performance with over 4% like-for-like sales growth and notable progress in strategic initiatives.

FY24 profit before tax is expected to align with the guided range of £915-935m. Key highlights include 215 new JD stores opened, and positive growth in athleisure. The FY25 profit before tax guidance is £900-980m, with trading in the new financial year-to-date in line with expectations.

Regionally, Europe experienced strong trading, while the UK/ROI faced challenges due to high apparel sales mix and limited participation in online promotions. North America saw growth despite a highly promotional market, and Asia Pacific demonstrated significant growth, particularly in New Zealand and Thailand.

JD said expects softer trading conditions in Q1 FY25, improving towards H2, with continued investment in infrastructure.

The shares have had a tough year, but the recent trading update was received well by the market – indicating that prices have successfully hammered out a bottom.

JD. Daily Candle Chart

JD. Daily Candle Chart

Vodafone and Three merger under scrutiny: Doubts arise over price hikes

The merger between Vodafone (VOD) and Three is now uncertain because the Competition and Markets Authority (CMA) is investigating it closely. The CMA is worried that if the merger goes through, prices for mobile phone users might go up and the quality of service might go down.

The merger, which is worth £15 billion, would bring together 27 million customers under one provider, making it the biggest mobile network in the UK. However, there are concerns that it could reduce competition among phone companies.

Last month, the CMA gave Vodafone and Three a chance to address these concerns, but they didn’t come up with any solutions. Now, the CMA will conduct a thorough investigation, which could last for about 24 weeks. It’s possible that the merger might be stopped altogether.

Vodafone and Three argue that the merger would help them invest more and compete better with other big companies like BT/EE and Virgin Media-O2. They believe it would improve the quality, speed, and coverage of their networks.

But the CMA is worried that the merger could make it harder for smaller mobile companies, like Sky Mobile or Lebara, to offer good deals to their customers. This is because there would be fewer network operators available for them to partner with.

VOD Daily Candle Chart

VOD Daily Candle Chart


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