UK Banks' Net Interest Income Seen Close to Peak -3-

0853 GMT - James Cropper continues to invest to support profit growth, Shore Capital says in a note after the advanced-materials and paper-products group posted a positive trading update for fiscal 2023 in which it said it sees adjusted pretax profit ahead of views and outlined three strategic changes including reorganizing its divisions and boosting innovation investment. "We believe that the strategy announced today supports our investment case of management being able to accelerate sales growth and/or margin improvements across the group," says analyst Robert Sanders. Shore has James Cropper as a house stock. Shares, which are down 32% year-to-date, rise 4.4% at 600 pence. ([e-mail])

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Hunting's Momentum Could Continue on Expected Equipment Demand Growth

0845 GMT - Hunting shows it is gearing toward increased activity across its business after significant earnings in 1Q as demand for equipment should continue, RBC Capital Markets analyst Victoria McCulloch writes in a research note. Despite a lower U.S. onshore rig count, the energy-services group saw Ebitda more than double to $22.6 million in 1Q thanks to higher facility utilization and some pricing improvements. "Although there has been weakness in the U.S. gas market, and a decline in the U.S. onshore rig count, continued demand growth for equipment is expected," McCulloch says. RBC keeps an outperform rating on the stock and a price target of 400 pence. Shares are up 3.7% at 251.00 pence. ([e-mail])

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UK's Double-Digit Inflation Could Make BOE Hike a Done Deal

0842 GMT - U.K. inflation data, which was in double digits for the seventh consecutive month, makes a Bank of England rate hike in May seem like a done deal, Daiwa Capital Markets economist Emily Nicol says in a note. Importantly, having risen the prior month, core inflation failed to deliver the expected fall, remaining unchanged at a lofty 6.2% on year, she says. Headline inflation should fall sharply in April, probably close to 8%, due to a favorable base effect associated with last year's extreme hike in household energy bills, Nicol says. But core inflation--particularly in services--raises the risk that next month's hike won't be the last, she adds. ([e-mail])

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Glencore's Sweet-Talking of Teck Is Hardly Surprising

0836 GMT - Glencore indicates it could dig a bit deeper with its merger proposal for Teck Resources if Teck's board willingly engages in conversation--no big surprise as miners rarely back down once they fixate on a new target, AJ Bell says. The Anglo-Swiss mining and trading company said it is prepared to consider improvements to its merger, demerger proposal if the board engaged, but would be willing to go directly to shareholders if not. "Expect this drama to keep playing out--ultimately, it is all down to price and even the most stubborn will eventually cave in if enough carrots are dangled in front of their face," AJ Bell investment director Russ Mould says. Glencore shares are down 0.6% at 495.05 pence. ([e-mail])

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UK January 2027 Gilt Looks Attractive, Auction Expected to Go Well

0835 GMT - The U.K. 4.125% January 2027 gilt is in an attractive position on the supply cycle, and Wednesday's tap of the gilt by the Debt Management Office is expected to go well, say RBC Capital Markets analysts in a note. "Given the attractiveness of the bond on various micro-relative value structures, in the context of today's tap being its penultimate one, we think the auction should go very well." There is typically strong demand for bonds from a penultimate tap, the analysts say. ([e-mail])

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Plus500's Guidance Backing Seems Encouraging

0833 GMT - Plus500 kept its full-year guidance in line with consensus estimates and this is encouraging, but won't prompt forecasts to move, says Jefferies in a note. The online-trading platform operator reported first-quarter results with a 64% on-quarter boost in total revenue and 5% on-quarter increase in customer revenue. "We would expect a positive market reaction to higher revenues and Ebitda than expected," say analysts. Jefferies has a buy rating on the stock with a price target at 2,300 pence. Shares edge up 0.3% at 1,708 pence but are down 5.4% year to date. ([e-mail])

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Sterling's Gains After UK Inflation Data May Remain Limited

0834 GMT - Sterling rises on the prospect of the Bank of England raising interest rates further in May after Wednesday's higher-than-expected U.K. inflation data but the currency's gains may remain limited, MUFG Bank says. Higher short-term Treasury yields, which are supporting the dollar, will curtail sterling's strength, MUFG analyst Derek Halpenny says in a note. The possibility of a 50 basis points rate rise by the European Central Bank "will also limit GBP strength versus EUR although technically EUR/GBP is beginning to look like a move lower is plausible." GBP/USD rises 0.1% to 1.2441 and EUR/GBP falls 0.3% to 0.8804. U.K. annual inflation fell to 10.1% in March from 10.4% in February, above the 9.8% expected by analysts in a WSJ survey. ([e-mail])

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Pendragon's Continued Momentum Could Prompt Further Upgrades

0831 GMT - Pendragon's undoubtedly strong 1Q drives forecast upgrades, which could be lifted even further, should the momentum continue, Jefferies analysts Andrew Wade and Grace Gilberg write in a research note. "We remain positive on Pendragon's trading trajectory, its robust strategic execution, and the obvious success of the used-car transformation," they say. The result was in particular driven by high volumes in used vehicles, which offset a decline in used GPU, the analysts say. Jefferies lifts it pretax profit forecast and its price target on the stock to 29 pence from 28 pence. Share are up 9.2% at 18.78 pence. ([e-mail])

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(END) Dow Jones Newswires

04-19-23 0824ET