SSE Lifts EPS Guidance on Higher Profits -2-

1027 GMT - Diageo is able to weather some of the inflation pressures given its ability to drive pricing increases through its brands, however the deteriorating consumer backdrop might test how efficient the strategy is, AJ Bell investment director Russ Mould and financial analyst Danni Hewson say in a note. The owner of brands like Johnnie Walker and Guinness uses the 'premiumisation' strategy to pass input costs through higher product prices by appealing to its product superior quality and exclusivity. However, analysts will look on how price increases and cost efficiencies can offset inflation, and if the consumer willingness to spend proves persistent, they add. ([e-mail])

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Diageo Investors Likely to Focus on 1H Organic Growth

1044 GMT - Diageo is set to report its 1H results next week and investor debate will be mainly focused on growth, profit and shareholder returns, AJ Bell investment director Russ Mould and financial analyst Danni Hewson say in a note. The liquor maker is expected to report a 1H organic sales growth increase of 7.9% from the GBP8 billion reported for the same period a year earlier, they say. Diageo's organic operating profit is expected to increase 7.6%, translating into earnings per share of 100.3 pence from 85.6 pence, AJ Bell says. Investors are expecting a 10% increase on FY 2023 dividends, it says. ([e-mail])

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Spirent Communications Set for Order Weakness in 2023

1051 GMT - Spirent Communications is seeing some customers postpone investment decisions due to the macroeconomic environment, Jefferies analysts say in a research note. The test, assurance, and analytics services provider saw some order weakness in the fourth quarter of 2022, and it would be reasonable to expect such weakness to continue into the first half of 2023, they add. "While we now expect 2023 to see slight weakness, longer-term structural growth remains intact. Proactive cost control is expected to keep margins resilient amidst strong cash generation," they say. Jefferies has a buy rating on the stock with a price target of 340 pence. Shares trade down 18% at 228.20 pence. ([e-mail])

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SSP Group Has Cashflow, Balance Sheet to Support Expansion

1052 GMT - Food-and-beverage company SSP could see a return to historic growth trends beyond the recovery in passenger volumes, margins and the mobilization of contracts, Shore Capital analysts Greg Johnson and Clive Black say in a note. These may materialize as mid-to-high single digit annual revenue growth, modest annual margin accretion as well as a capital-allocation framework supporting shareholder returns, with around GBP500 million in the balance sheet by 2025 as firepower, the analysts say. "SSP has the cash flow and balance sheet to support its expansion, whilst the investment case will be normalized by the reinstatement of the dividend and the return of its capital allocation framework," the analysts say. Shore has SSP as a house stock. Shares are up 0.6% at 255.80 pence. ([e-mail])

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SSE Gains After Increasing Full-Year Earnings Guidance

1057 GMT - Shares in SSE rise 2% after the power generator increased adjusted earnings-per-share guidance for the year to the end of March by at least 25% to more than 150 pence. Higher gas prices and better gas-storage performance were to thank for the rise, helping to offset lower-than-expected renewable-energy output, Hargreaves Lansdown says. "Overall, the markets appeared to like this update and the group's valuation is now trading up around 9% over the past year," HL analyst Aarin Chiekrie writes. "Despite the re-base of its dividend to fund investment plans, the group's still paying a healthy dividend at a 3.9% forward yield. But remember, no dividends are guaranteed." ([e-mail])

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(END) Dow Jones Newswires

01-20-23 0653ET