Top UK Stocks to Watch: Travis Perkins sales rise ahead of Wickes spin-off

Travis Perkins reports strong growth ahead of the Wickes demerger, Deliveroo warns growth will slow down as lockdown eases, Entain’s online performance goes from strength-to-strength, Wizz Air forecasts a ‘gradual’ recovery, and Oxford Biomedica beats expectations.

UK

Top News: Travis Perkins like-for-like sales jump 17%

Travis Perkins reported strong like-for-like growth across the board in the first quarter of 2021 as it prepares to spin-off Wickes later this month.

The company, which owns its namesake DIY and building materials brand as well as others like Wickes and Toolstation, said like-for-like sales grew by 17.4% in the first three months of the year. The strong growth came despite it having less selling space and fewer trading days than the year before. Merchanting was up 15.5%, Toolstation 42% and plumbing and heating grew by 11.4%.

Reported sales came in at 6.8% and was dragged down by a 3.4% fall from plumbing and heating because of asset disposals made since last year, but that was more than offset by the 5.7% rise reported by Merchanting and the 49.8% surge in sales at Toolstation.

‘The group has enjoyed an encouraging start to the year with robust like-for-like sales growth across our businesses, underpinned by strong demand in the repair, maintenance and improvement (RMI) market. The Merchanting business has maintained the momentum seen in the second half of last year while Toolstation continues to outperform, driven by its convenient and trade focused proposition,’ said chief executive Nick Roberts.

Travis Perkins said it expects to separate Wickes in a demerger later this month as part of a plan to simplify and refocus the company. Wickes reported sales growth of 18.9% in the quarter. It revealed its demerger plans in July 2019 and on Thursday said Wickes shares will start trading on April 28.

‘We are encouraged by the robustness of the RMI market and the continued recovery in our other key end markets. However, at this early stage in the year, our expectations remain unchanged as we continue to make progress on the delivery of our longer-term strategic plans,’ said Roberts.

Where next for the Travis Perkins share price?

Travis Perkins share price has been trending firmly higher since early November. It trades within the multi-month ascending trendline and above its 20 & 50 EMA on the daily chart showing an established bullish trend. 

The RSI trades in bullish territory but not overbought suggesting that there could be more upside on the cards. 

The price trades at the upper end of the ascending channel above the mid-point also favouring a bullish set up. 

Immediate resistance can be seen at 1715 the upper band of the channel. A meaningful move and close above this level could see the price head towards 1748 the pre-pandemic February high, ahead of 1840 the high January 2020. 

On the flip side, failure to move above the upper band could see the price fall towards 1600 the 20 EMA. Strong support can be seen at 1540 the lower band of the ascending channel, the 50 EMA and horizontal support. A break below here could see the sellers gain momentum. 

Deliveroo expects growth to slow as lockdown eases

Deliveroo said growth has continued to accelerate after orders more than doubled in the first quarter of 2021, keeping it on course to meet expectations in its first year as a publicly-listed business.

The company said orders grew by 114% in the first three months of the year, representing the fourth consecutive quarter of accelerated growth. It served 71 million orders and the gross transaction value jumped 130% to £1.65 billion. Order numbers and transaction value more than doubled in both the UK and its international markets.

Deliveroo said its active customer base was 91% larger in the first quarter than the year before, with an average of 7.1 million monthly active users.

‘We are delighted with the Deliveroo Q1 results. Demand has been strong in both the UK&I and International markets driven by record new consumer growth and sustained engagement from our existing consumers,’ said founder and chief executive Will Shu.

‘This is our fourth consecutive quarter of accelerating growth, but we are mindful of the uncertain impact of the lifting of COVID-19 restrictions. So while we are confident that our value proposition will continue to attract consumers, restaurants, grocers and riders throughout 2021, we are taking a prudent approach to our full year guidance,’ he added.

Deliveroo warned it does expect the stellar growth seen lately to ease as lockdown ends but said it was unsure how quickly it would deaccelerate. Still, the performance keeps the company on course to deliver annual gross transaction value growth of between 30% to 40% and to deliver a gross margin of 7.5% to 8.0% of GTV, in line with the targets it provided in its prospectus.

It was the first update from Deliveroo since it went public two weeks ago, with shares having fallen by almost one-third since its IPO.

Deliveroo shares were trading 1.4% lower in early trade at 267.2.

Entain continues to deliver strong online growth

Entain said it delivered its 21st consecutive quarter of double-digit online growth in the first three months of 2021, helping it cushion the blow from its physical stores being closed.

The bookmaker said online net gaming revenue jumped 33% in the first quarter, helping offset the lost sales from its stores that were closed because of the pandemic. Notably, growth came in at 44% when Germany was excluded after regulatory changes impacted its performance there.

‘With some easing of Covid restrictions, we are delighted to be welcoming customers back into our shops. While it has only been a handful of days since the re-opening in parts of the UK on the 12 April, we look forward to returning to more normal trading across our whole business,’ said chief executive Jette Nygaard-Andersen.

The company added that its US arm BetMGM continues to build momentum and is now the number one iGamining operator for the whole of the US with market share of 23% and is ready to step up its challenge in the sports betting sector. Further details on the BetMGM business will be revealed on April 21.

‘In line with our expectations, the momentum from the end of 2020 has carried into 2021. Although Covid creates some near-term uncertainty, by maintaining our focus on the customer, providing them with great products and services, we remain confident and excited in our long-term prospects,’ said the CEO.

Entain shares were up 1.5% in early trade at 1627.0.

Wizz Air expects ‘gradual’ recovery to begin this summer

Wizz Air said the unprecedented challenges posed by the coronavirus crisis will push it deep into the red when it releases its annual results for the year to the end of March 2021, and said it is expecting a gradual recovery to start this year.

The airline said it will book an annual underlying net loss of EUR475 million to EUR495 million while its bottom-line net loss will be in the range of EUR570 million to EUR590 million. That compares to the underlying profit of EUR344.8 million and a reported profit of EUR281.1 million in the last financial year.

Wizz Air said it is still focused on cutting costs, minimising its cash burn and adjusting capacity to try and save as much cash as possible until passenger numbers start to recover, and said its EUR1.6 billion of liquidity is more than enough to cover its costs during these tough times considering it burnt through EUR87 million in the fourth quarter of its financial year.

‘The start of F22 (the year ending 31st March 2022) continues to be marked by travel restrictions across our region and we expect only a gradual traffic recovery into late summer 2021, following what is expected to be a period of good progress of national vaccination plans across key markets,’ said Wizz Air.

‘Because of the uncertainties around travel restrictions, Wizz Air today is not in a position to provide guidance for the year ending 31st March 2022,’ it added.

The airline will release its annual results for the recently-ended financial year on June 2.

Wizz Air shares were up 1.2% in early trade at 4935.0.

Oxford Biomedica beats expectations in 2020

Oxford Biomedica delivered better-than-expected results in 2020 as it made significant progress with its LentiVector platform and began work on the AstraZeneca coronavirus vaccine, both of which should help it make further progress in 2021.

Revenue rose 37% to £87.7 million from £64.1 million the year before. The company reported adjusted Ebitda of £7.3 million, slightly above its guidance and a marked improvement from the £5.2 million loss in 2019. The operating loss narrowed to £5.7 million from £14.5 million and also beat analyst expectations.

It was a busy year for Oxford Biomedica. The company opened its Oxbox manufacturing facility, struck a number of major partnerships, entered the FTSE 250, and began work on the AstraZeneca coronavirus vaccine.

Oxford Biomedica said it is expecting revenue from its LentiVector platform to increase further in 2021 and said the work on the AstraZeneca vaccine is expected to boost revenue by £50 million this year, compared to just £10 million in 2020. Adjusted Ebitda is also expected to grow, but a more modest rate as it invests more into R&D.

‘Discussions and feasibility studies are ongoing with various potential cell and gene therapy partners and the group aims to increase not only the number of partners but also the number of programmes worked on by existing partners during the course of 2021,’ said the company.

‘Looking to 2021 and beyond, with the group's ever increasing number of partners programmes and continued broader market growth in cell and gene therapy, the future has never looked more exciting and the group is well positioned to maximise the opportunities ahead,’ it added.

Oxford Biomedica shares were up 1% in early trade at 1048.0.

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