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FTSE rally after US debate fades as easyJet and Wolseley fall back

Discussion in 'Market News' started by Lily, Sep 27, 2016.

  1. Lily

    Lily Forum Member

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    Leading shares slip back after initial enthusiasm as investors remain nervous

    An immediate rally after the US presidential debates has run out of steam, with the FTSE 100 now off its best levels.

    The index is currently down 3.80 points at 6814.24 having earlier climbed as high as 6865, albeit nowhere near recovering Monday’s losses.

    Markets suggest victory for Clinton in the first of three US Presidential Debates. Not so much for her own performance, more because rival Trump failed to keep his cool and/or appear more presidential as many had expected. It’s still early days. Trump could be setting the bar low for the remaining face-offs. And he does have a bouncebackability that has already helped his campaign get within touching distance of the oval office.

    We think after two profit warnings over the last 3 months or so the risk to 2016 consensus earnings expectations are broadly neutral with 2016 estimated pretax profit consensus forecasts in the range of £475m to £596m. Nevertheless, we have slightly reduced our estimates for 2016 (previous £541m) on the back of currency movements and are now on 2016 pretax profit of £524m compared to consensus £530m. Looking into 2017 visibility unsurprisingly remains poor with uncertainties around winter pricing. Nevertheless, we see risk on the downside given industry capacity indications.

    We believe that today’s update is reassuring, given concerns about weak demand for European sailings from the core US market and also concerns about what the Zika virus might do to demand for Caribbean sailings (about 33% of 2016’s capacity is expected to be in the Caribbean). We have increased our earnings per share forecast from $3.30 to $3.35, in line with guidance.

    Redx has announced this morning that in vivo testing has confirmed that its novel antibiotic programme targeting bacterial topoisomerase has delivered preclinical results that confirm its activity against drug resistant Gram negative bacteria when compared to a current broad spectrum antibiotic.

    Gram negative bacteria such as E Coli and Pseudomonas are particularly difficult to eliminate (compared to Gram positive bacteria such as Staph Aureus) indicating the importance of developing novel treatments, particularly for more insidious drug resistant infections. We believe these data once again demonstrate the broad capability that Redx possesses to deliver potentially first-in-class as well as best-in-class therapies.

    ValiRx is close to dosing patients in its VAL401 programme, which will be a major milestone for the group, as it will move a second programme into the clinic. Moreover, the kick-off of a new programme, VAL301, further expands the group’s pipeline.

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