FTSE 100 Live Wednesday
- GSK vaccine sale disappoint
- Next forecasts £1bn profit
- Aston Martin sticks by guidance
Market update: Next and StanChart upgrades offset GSK weakness
10:10 , Graeme EvansA £1 billion profits landmark for Next and strong trading at Standard Chartered today provided FTSE 100 cheer during another painful session for GSK investors.
London’s top flight followed Tuesday’s 0.8% reverse by losing another 31.85 points to 8187.76, a performance matched in Europe despite GDP estimates in key economies including France and Germany coming in ahead of hopes.
GSK topped the fallers board, dropping another 49p to a fresh 2024 low of 1402p after third quarter sales figures for key vaccines Shingrix and Arexvy disappointed the City.
The latest reverse for shares came despite strong performances in oncology and general medicines, as well as a forecast-beating earnings figure of 49.7p a share.
Having removed uncertainty by resolving the vast majority of Zantac litigation cases in the quarter, chief executive Emma Walmsley struck an upbeat tone in today’s update.
Reiterating results and dividend guidance for 2024, she said the company was “even more confident” in its 2026 and 2031 outlooks.
Alongside GSK on the fallers board, Anglo American dropped 68p to 2415p after BHP told shareholders at its AGM that it had “moved on” following its failed bid for the miner.
The leading performance in the FTSE 100 came from Standard Chartered, which continued its recent momentum by adding another 3% or 28.6p to 905p. The shares are up more than 30% since early August.
Alongside today’s better-than-expected third quarter update, the Asia-focused lender pledged to return at least $8 billion to shareholders in the period up to 2026. This compared with previous guidance for at least $5 billion.
Next shares rose 145p to keep the retailer near a record high at 10,215p, having delivered the latest in a series of profit upgrades.
Full-price sales in the August-October quarter jumped 7.6% on last year, boosted by the early arrival of colder weather this autumn.
It increased guidance for the current quarter’s full price sales growth by one percentage point to 3.5%, meaning that profits for the year will now top £1 billion.
Peel Hunt maintained its 11,000p target price following the update: “Next remains a core sector Buy for us, reflecting consistent double-digit total shareholder return.”
In the FTSE 250 index, Aston Martin Lagonda surrendered an initial 5% rise after it said trading had been in line with September’s downgraded guidance. Shares were later down by 0.6p at 104.9p.
GSK struggles continue as vaccine sales disappoint
08:57 , Graeme EvansGSK shares have set a fresh low for the year, falling 49p to 1402p even though its core earnings figure of 49.7p a share beat expectations for the third quarter.
The latest decline in the FTSE 100 firm’s valuation reflected disappointment at its performance in vaccines, including a sales miss for shingles product Shingrix.
The respiratory syncytial virus vaccine Arexvy also missed City targets, although the 72% year-on-year decline was driven by a tough comparative and headwinds due to the prioritisation of Covid vaccinations in the US.
The overall 15% decline in vaccine sales was offset by momentum elsewhere, with the performance in oncology and general medicines ahead of forecasts.
Excluding its Covid-19 solutions and at constant exchange rates, GSK still expects to deliver top-line growth of 7-9%.
With the uncertainty caused by recent Zantac litigation now over, Shore Capital continues to believe the share price is well positioned to rerate.
The City firm said: “Our thesis remains that GSK offers a decent period of near-term growth with a realistic prospect of fulfilling its longer-term growth ambitions, which taken together look wholly unbecoming of single digit earnings multiple.”
Aston Martin sticks by guidance, shares rise
08:42 , Graeme EvansAston Martin Lagonda shares have improved 5.3p to 110.8p after the car maker reassured investors it is on track to meet September’s downgraded guidance.
The Warwickshire-based firm last month scaled back estimates for 2024 due to supply chain disruption and weak demand in China.
Volumes rose 14% to 1641 in the third quarter, supported by the scheduled ramp up of new Vantage and DBX707 models.
Year-to-date volumes were 17% lower at 3639, with revenues down 4% to £994.6 million and earnings 14% lower to £112.9 million. Net debt stood at £1.2 billion.
Adrian Hallmark, who joined as chief executive in September, said: "Long-term value creation and sustainable growth are key priorities as we look forward to the fourth quarter and beyond.
“We will deliver our fully reinvigorated portfolio to market efficiently and maximise the considerable commercial potential, including greater personalisation opportunities, to further strengthen the order book.”
Next higher in downbeat FTSE 100, GSK under pressure
08:13 , Graeme EvansThe latest profit upgrade by Next has sent shares up by 130p to 10,200p, still short of the record valuation seen over recent weeks.
In contrast, GSK shares remain under pressure after falling another 26.5p to 1425p on the back of the company’s in-line third quarter trading update.
The FTSE 100 index has followed yesterday’s 0.8% decline by reversing another 41.85 points to 8177.76.
Among other companies reporting today, Standard Chartered shares rose 3% or 24.2p to 900.6p. FTSE 250-listed Aston Martin Lagonda lifted 4% or 4.3p to 109.8p after reiterating the lower guidance given in September.
France GDP beat hopes, US figure due later
08:01 , Graeme EvansThe first of today’s GDP estimates from Europe and the United States has been posted, with France reporting a growth rate of 0.4% for the third quarter.
This compares with 0.2% in the previous three months and is slightly ahead of estimates for quarter-on-quarter output growth of 0.3%. The figure was boosted by domestic demand following the Paris Olympics.
Europe’s headline figure due later this morning is expected to be in line with the previous quarter’s 0.2% reading. The US growth rate is forecast to be consistent with the 3% reported three months ago.
Borrowing costs rise ahead of Budget statement
07:44 , Graeme EvansThe UK’s benchmark 10 year gilt yield last night stood at 4.32% heading into this afternoon’s Budget statement, the highest level since June before weakening to about 4.25% this morning.
Deutsche Bank said: “From a market point of view, the main focus today will be on how much additional borrowing there is, particularly given it was just over two years ago that the mini-budget under Liz Truss sent UK markets into turmoil.
“In terms of what to expect, an important focus will be on the new fiscal rules, and Chancellor Rachel Reeves has confirmed that the government is planning to change the way it measures debt in order to fund extra investment.”
Meanwhile, tax rise speculation has focused on an increase in national insurance contributions by employers, higher capital gains tax rates, and an extension to the existing freeze on income tax thresholds beyond 2028.
Next profits to top £1bn after another upgrade
07:21 , Graeme EvansRetailer Next is set to report annual profits above £1 billion after today delivering another forecast-beating trading update..
Full-price sales in the August-October period jumped 7.6% on last year, compared with its previous guidance for the third quarter of 5%.
Next said: “We believe the strong performance was driven by the early arrival of colder weather this year, versus an unusually warm September and early October last year.”
It also increased guidance for the current quarter’s full price sales growth by one percentage point to 3.5%.
The improved sales in the third quarter along with the forecast for the fourth quarter add £43 million to full price sales and £10 million to profit.
This means that profit guidance for the full year now tops £1 billion, having been £995 million before today’s update.
GSK reveals steep fall in vaccine sales, backs outlook
07:13 , Graeme EvansGSK today reported a 15% drop in vaccine sales in the third quarter, offset by a 19% jump for revenues in its Speciality Medicines division.
Total sales of £8 billion for the three months were 2% lower than a year ago, although 2% higher when excluding currency fluctuations.
Operating profit fell 86%, driven by a charge of £1.8 billion in relation to the recent Zantac settlement.
Reiterating guidance for 2024, chief executive Emma Walmsley said today that the company is “even more confident” in its 2026 and 2031 outlooks.
Cloud growth boosts Alphabet earnings, shares jump
07:04 , Graeme EvansShares in Google owner Alphabet were 6% higher in dealings after last night’s closing bell, boosted by forecast-beating third quarter results.
Revenues rose 15% to $88.3 billion, while net profit of $26.3 billion came in 34% higher than a year earlier and well ahead of Wall Street targets.
Hargreaves Lansdown analyst Matt Britzman said: “Alphabet is the first major tech name to report earnings, and it hasn’t disappointed.
“Cloud growth was strong, and better than expected, which continues to support the argument that the major cloud providers are well-placed to benefit from the AI revolution.”
FTSE 100 seen lower after mixed US session
07:02 , Graeme EvansThe FTSE 100 index is set to remain under pressure, having fallen by 0.8% in yesterday’s session. Futures trading is pointing to a fall of 23 points to 8197.
The selling follows a mixed session on Wall Street, with the Dow Jones Industrial Average down by 0.4% and the S&P 500 index 0.2% higher.
Brent Crude stands at $71.71 a barrel, while the pound is near to $1.30 ahead of this afternoon’s Budget statement.
