FTSE 100 movers: Rolls-Royce rallies; Burberry hit by broker note
Sharecast – Rolls-Royce (LON:) surged as it set out its medium-term targets ahead of a capital markets day. The engine maker said it plans to deliver operating profit of £2.5bn to £2.8bn, operating margin of 13% to 15%, free cashflow of between £2.8bn and £3.1bn and return on capital of 16% to 18%.
Lloyds Banking Group (LON:) was boosted by an upgrade to ‘overweight’ at Morgan Stanley (NYSE:).
B&M (LON:) was also lifted by a broker note, as Citi upped its stance on shares of the discount retailer to ‘buy’ from ‘neutral’. It noted the “quasi-defensive” nature of its value-led proposition and around 5% per annum space runway in a category with a 10-year trailing compound annual growth rate of 10%.
“These traits help to underpin our 15x PER target price of 640p (from 540p) and expectations for total shareholder return of 14-16% for FYMar25E/FYMar26E (ETR +19%), with the recent bond issuance also paving the way for the continuation of its special dividends,” Citi said.
Burberry (LON:) fell as HSBC (LON:) slashed its price target on the ‘hold’ rated stock. It noted that the repositioning of the brand is underway with the products from the new designer having started to reach the shelves in September 2023.
However, HSBC said the pricing of the new collection – 20% higher – combined with the general slowdown of the luxury market increasing polarisation (consumers favouring the more established luxury brands) lead it to question the efficiency of the turnaround.
“Even if management maintained its long-term target, the profit warning for FY23/24 announced in November is not reassuring,” the bank said.
It added that while the valuation may seem attractive, visibility is too low.
– Risers
Rolls-Royce Holdings (RR.) 259.30p 6.62%
Smurfit Kappa Group (CDI) (LON:) 2,798.00p 3.40%
Mondi (LON:) 1,369.50p 1.22%
Smith (DS) (SMDS) 282.80p 0.78%
Lloyds Banking Group (LLOY) 42.26p 0.50%
National Grid (LON:.) 1,019.50p 0.49%
B&M European Value Retail S.A. (DI) (BME) 553.40p 0.47%
Shell (LON:) (SHEL) 2,581.00p 0.41%
International Consolidated Airlines Group (LON:) SA (CDI) (IAG) 151.45p 0.40%
BP (LON:.) 476.80p 0.37%
FTSE 100 – Fallers
Pearson (LON:) 926.80p -4.41%
Burberry Group (LON:) 1,459.50p -2.96%
Entain (LON:) 830.00p -2.61%
Rightmove (RMV) 521.80p -2.21%
Land Securities Group (LAND (LON:)) 617.40p -2.19%
Ocado Group (LON:) 562.60p -2.09%
Prudential (LON:) 890.40p -2.02%
Rentokil Initial (LON:) 440.00p -1.94%
SEGRO (SGRO) 804.00p -1.83%
Unite Group (LON:) 962.00p -1.79%
