Sterling Could Stay Rangebound Versus Euro -2-

1123 GMT - It's difficult to be a dove right now in the U.K., HSBC economists say in a note. Hawkish data--CPI annual inflation of 10.1% in March was well above Bank of England expectations of 9.2% at this point--means monetary-policy committee members at the central bank that might have been inclined to join doves in May are likely to be thinking again, the economists say. An expected slowdown in wage growth in February also failed to materialize, and high food and core inflation continue to worry, they add. Until now, the 25 basis-point rise in March would've been "all for now," but HSBC now pencils in two further hikes of 25 basis points in May and June, with no scopes for cuts this year or next. ([e-mail])

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Foxtons's Lettings Unit Flexes Despite Mortgage Mayhem

1118 GMT - Foxtons reported first-quarter revenue jumped 10% to GBP32.9 million on strength in its lettings division, which is becoming a growing share of the business as home sales struggle in the mortgage market turmoil in the aftermath of the U.K.'s Minibudget last September, Interactive Investor says. The U.K. real-estate agency's shares have struggled since peaking just before the pandemic sell-off at the start of 2020, reaching a low in October last year following the Minibudget, Interactive Investor's Head of Investment Victoria Scholar says in a market comment. "Since then, the stock has been attempting to regain ground, up 27% so far this year but it's a long way off the 2020 high," Scholar says. Shares are down 0.7% at 37.75 pence. ([e-mail])

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Babcock International Looks Set for a Period of Growth

1107 GMT - Babcock International is a much stronger company today after having mostly completed a portfolio realignment program which included significant disposals, and should be seen as a big positive for U.K. sovereign defense, Wheeldon Strategic analyst Howard Wheeldon says in a note. The defense company's CEO David Lockwood and his team have placed it in an excellent forward position with significant opportunities being created as a result, he says. "Having previously announced export agreements with Indonesia and Poland for the Arrowhead 140 (AH140) naval ship design... together with new various defense contracts in Australia, France and the U.K. over the past year, the company looks set for a period of very interesting growth," Wheeldon says. ([e-mail])

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Deliveroo's UK, Ireland Expansion Helped Offset International Weakness

1102 GMT - Deliveroo's U.K. and Ireland offering expansion helped support growth, but international revenue struggled, dragged by French market weakness and Covid-19 restrictions in Asia at the beginning of the year, Interactive Investor's head of investment Victoria Scholar says in a research note. "Deliveroo has been struggling with cost inflation as well as weaker demand amid the cost-of-living crisis with the backdrop of a softening consumer as households look to make cutbacks on non-essential spending," she says. Shares are again under pressure Thursday following the company's first-quarter update, having endured a disastrous flotation and shares having had a horrible time during their lifespan on the market, shedding 64% since April 2021, she says. ([e-mail])

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Essentra's Growth Should Drive Market-Share Gains

1037 GMT - Essentra is unleashing its growth component with a balance sheet able to fund acquisitions, says Liberum in a note initiating its coverage of the stock with a buy rating and 280 pence target price. The British plastics-and-fibre-product supplier group's now stand-alone components business has an excellent track record and strong growth prospects in large, fragmented markets, analysts say. "The target--to triple EBIT to GBP120 million by FY27E--is ambitious and requires a steady flow of acquisitions. The balance sheet can fund this, alongside investment in the proposition, which should drive market-share gains," they say, adding shares have de-rated aggressively despite the company delivering on its strategy. Shares, which are down 6.6% YTD, edge down 0.3% at 190.2 pence. ([e-mail])

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WH Smith 1H Profit Rises, But High Street Profit Eases

1035 GMT - WH Smith drops 3% as the U.K. newsagent, bookseller and convenience-food retailer reported higher first-half revenue and profit, but said trading profit from its high-street shops fell. Pretax profit in the six months to the end of February was slightly ahead of Barclays's expectations, the bank says. The company's travel-retail business did better than Barclays expected, with GBP47 million of pretax profit before interest GBP3m above the brokerage's forecast. Still, the GBP24 million of EBIT made by its high-street operation was GBP1million below Barclays's estimate, the bank says. "As we enter 2H, the proportion of profit from travel starts to ramp up and trading momentum has improved once again," Barclays analysts say in a note. ([e-mail])

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Jet2's Package Holiday Demand Could Boost FY 2024 Profit

1035 GMT - Jet2's summer 2023 sale capacity is 7.2% higher year-on-year, with a stronger focus on package holidays, Goodbody analyst Mark Simpson says in a note. If package vacations continue to contribute a higher percentage of sales compared with last year, this could boost pretax profit forecasts for FY 2024, which currently stand around GBP417 million, by around 10%, Simpson says. Although around 40% of bookings for the summer remain unsold, as well as the majority of winter, its pricing and margins per booked passenger are encouraging, he says. ([e-mail])

Contact: London NewsPlus, Dow Jones Newswires;

(END) Dow Jones Newswires

04-20-23 0915ET