EasyJet Must Do More Than Just Ride the Recovery -2-

Celsius Resources Ltd. expects a market capitalization of 14.8 million pounds ($18.2 million) when its shares start trading on London's junior AIM later this month, it said Wednesday.

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Forterra Expects 2022 Earnings to Beat Management Views After Price Increases

Forterra PLC said Wednesday that it expects its 2022 earnings to be slightly ahead of management views as it increased prices to offset inflation costs, but that it saw a softening in demand toward the end of the year.

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Broadcom's $61 Bln Acquisition of VMware Faces UK Regulator Probe

The U.K. Competition and Markets Authority said Wednesday that it has begun a review into chip maker Broadcom Inc.'s planned $61 billion acquisition of VMware Inc. and has set a deadline of March 22 for its initial decision.

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Ex-Janus Henderson analyst accused of insider dealing, money laundering -- Financial News

Redinel Korfuzi is accused of using confidential inside information to help him and four other individuals net profits of GBP1.5m

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Diageo's 1H Sales Poised To Grow, 2H Prompts Caution -- Earnings Preview

Diageo PLC is scheduled to report results for the first half of fiscal 2023 on Thursday. Here's what you need to know:

 
Market Talk: 

J.D. Wetherspoon Sales Close to Prepandemic Levels

1146 GMT - J.D. Wetherspoon's holiday performance update was in line with commentary from its peers with strong business throughout the festive period and like-for-like sales almost meeting prepandemic levels, Jefferies says. The pub operator said it remains "cautiously optimistic" for 2023 and hasn't flagged any incremental cost pressures nor any hit from strikes or snow, Jefferies analysts say in a research note. The company has financial and product characteristics that should mitigate pressures, including a mostly freehold estate, high leverage with interest-rate swaps now terminated, strong offer pricing compared with peers, fixed utility costs and long-term food-and-drink contracts, the U.S. bank says. Jefferies retains its buy rating and 479.0 pence price target on J.D. Wetherspoon's stock. ([e-mail])

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J.D. Wetherspoon's Performance Missing Prepandemic Levels Is 'Damaging'

1149 GMT - J.D. Wetherspoon's Christmas business was better on-year, but that is unsurprising--what is damaging is it is still below prepandemic levels, AJ Bell says. The pub operator always prized volume over margins, so given how fast costs are rising it is unsurprising that profitability is pressured, AJ Bell investment director Russ Mould says in a market comment. Chair Tim Martin labels supermarkets as the culprit, as people buy booze in shops and drink at home--a situation he notes is exacerbated by differences in tax treatment, the brokerage says. "Barring some kind of concession by the government, all Wetherspoons can do is redouble its efforts to make its venues appealing places for people to visit, rather than just somewhere to buy relatively inexpensive drinks," Mould says. Shares are down 2.9% at 465.0 pence. ([e-mail])

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Diageo 1H Likely to Show Little Signs of Change in Consumer Behavior

1157 GMT - Diageo's 1H performance is expected show early signs of slowing premiumisation trends--the action of making a brand more appealing by emphasizing its superior quality or exclusivity--in North America, Citi analysts say in a note. "(In North America) we expect overall trading to have held up well, but for management to highlight early signs of changing consumer behavior with value and standard brands declining less and the rate of premiumisation to higher-end products easing," they say. As for emerging markets, they are likely to be resilient led by India and Latin America, Citi says. Overall, trading is expected to have limited signs of significant changes in consumer behavior or downtrading to date, the U.S. bank says. ([e-mail])

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DiscoverIE Better Than Peers at Passing on Costs, Says Shore Capital

1158 GMT - DiscoverIE has been more successful than peers in passing on costs due to its customized solutions and its products representing a relatively small proportion of clients' budgets, says Shore Capital. Analysts Tom Fraine and Akhil Patel say the electronic components maker's gross margin has remained robust despite copper and aluminum prices decreasing, signaling price increases may have moderated in the third quarter. They add that operational leverage and M&A could drive further margin expansion. Shore rates the stock hold, noting the group looks well placed to benefit from long-term trends. Shares are up 4.6% at 828.0 pence. ([e-mail])

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J.D. Wetherspoon Sales Growth Reverses, Guidance Seen as Tenuous

1203 GMT - J.D. Wetherspoon's like-for-like sales slowed to 2% below prepandemic levels over the last 12 weeks, having been 0.4% above in the first 14 weeks to early November, Peel Hunt says. The pub operator's high operational gearing in its low pricing/low margin model leaves forecasts hugely sensitive to small changes in sales and Peel Hunt will consider cutting forecasts after an analyst meeting, Douglas Jack and Ivor Jones say in a research note. "We believe the combination of a tough trading environment and current fixed energy contracts maturing in July leave forecast risk weighted to the downside," the analysts say. Peel Hunt retains its hold rating and 550 pence price target on the stock. Shares are down 2.7% at 466.2 pence. ([e-mail])

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Upcoming Central Bank Meetings Likely to Drive Up Bond Yields

1220 GMT - Upcoming meetings by the U.S. Federal Reserve Bank, the European Central Bank and the Bank of England are expected to deliver interest-rate increases which "could be a tough environment for all asset classes," RBC Capital Markets analysts say in a note. Interest-rate hikes are expected to drive up government bond yields and put downward pressure on equity markets, the analysts say. The anticipated economic downturn is also likely to negatively affect equities, according to the Canadian bank. ([e-mail])

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EasyJet's Numbers Need to Come Up as Previous Guidance Looks Overly Cautious

1221 GMT - Considering easyJet's 1Q guidance came at the end of November and looked pessimistic versus commentary from peers, the scale of the 1Q beat is significant and reflects either a strong upturn in December or an overly cautious view at the end of November, Bernstein analyst Alex Irving says in a note. The budget airline guided for an increase of around 20% in revenue per seat which ended up at over 36% as both fares and ancillaries rose around 20%, and it expects these strong trends to continue into 2Q, Irving says. "Airline reporting season starts optimistically, and we expect easyJet to be the first of several strong prints. Earlier guidance looks overly cautious and numbers will need to come up," he says. ([e-mail])

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Direct Line Value Could Be Preserved by Ditching 2023 Dividend, Says Berenberg

1226 GMT - Direct Line not paying a dividend in 2023 could be the right option, Berenberg says in a note. The brokerage sees this as the most effective and cost-efficient option for the insurer as it tries to recapitalize itself. "While we believe that Direct Line has the ability to generate good returns in the long term, if the cancelling of the dividend is announced, we believe that this would lead to further underperformance," says analyst Thomas Bateman, cutting Berenberg's rating of the stock to hold from buy. He adds that this option would help preserve the value of shares over the long term instead of permanently devaluing them if other options are utilized. The target price is cut to 160 pence from 272 pence to reflect a higher cost of equity associated with the shares, he adds. Shares fall 2.2% at 172.20 pence. ([e-mail])

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J.D. Wetherspoon's High-Volume, Low-Margin Structure Looks Risky

1249 GMT - J.D. Wetherspoon's like-for-like sales remain stubbornly below prepandemic levels and while the pub operator is improving, it is still lagging behind the sector's recovery, Liberum says. This is likely structural with a change in demographics and behavior creating challenges for its large-site, high-volume, low-margin model, Liberum analysts say in a research note. Furthermore, the shift in sales mix toward food sales is likely to weigh on margins, compounding the effect of inflationary headwinds, they say. "There is nothing in this update to allay our concerns that J.D. Wetherspoon's reliance on large, high-volume sites remain structurally challenged from both a volume recovery and margin perspective," the brokerage says. Liberum retains its hold rating and 450 pence price target on J.D. Wetherspoon's stock. Shares are down 2.6% at 466.4 pence. ([e-mail])

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Wetherspoon Faces Cost Pressures, Debt Concerns

1255 GMT - J.D. Wetherspoon is facing pressures despite upbeat longer-term prospects, Panmure Gordon says, downgrading the U.K. pub group to hold from buy. The company's unique low pricing and high-volume business model is fundamentally attractive and management acts in the long-term interest of the business, Panmure says. Wetherspoon also has plenty of long-term opportunities including the chance to gain market share from smaller operators likely to be struggling, the U.K. brokerage says. "However, given the current cost pressures facing the company, concerns about net debt and current valuation, we cut to a hold recommendation," analyst Alex Chatterton writes, cutting Panmure's target price on the stock to 460 pence from 640p. Shares fall 3% to 466 pence. ([e-mail])

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(END) Dow Jones Newswires

01-25-23 0858ET