FTSE 100 analysis: Ocado shares jump on surprise positive Ebitda – Top UK stocks

FTSE 100 is muted

The FTSE 100 is trading 2.9 points higher this morning.

The economic calendar includes Canadian inflation data this afternoon, followed by US retail sales, industrial production and the NAHB housing market index. There are also speeches from the Federal Reserve’s Michael Barr and Michael Gibson later in the day. US earnings will also be on the radar. 

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the FTSE 100, has traded in a narrow range since markets opened for a new trading week. The index is holding above 7,400 but risks suffering a fall back toward 7,330 lows we saw last March. Any slip below here would open the door to the 2023-lows of 7,280.

The index tested the falling trendline last Friday, showing it is still providing resistance. A move above 7,450 is needed before it can try to break above it again.

Top UK stock news

Ocado is up over 5% after delivering a surprise positive adjusted Ebitda in the six months to May 28 of £17 million, driven by earnings from its Technology Solutions arm and its cost-cutting initiatives. Its grocery arm delivered a small loss in the period but did return to profitability in the second quarter. That will be welcome considering analysts had predicted a loss of over £25 million! Revenue rose 9% to £1.4 billion and also came in higher than the £1.3 billion forecast, helped by better-than-expected sales from its grocery arm. Still, earnings were more than swallowed up by depreciation, amortisation and exceptional items, which resulted in a loss before tax of £289 million – wider than the £224.5 million loss pencilled-in by analysts.

Vodafone is down 1% after said it will receive another EUR500 million in proceeds from the consortium of long-term investors that is part of its co-management plan for Vantage Towers, taking total net proceeds to-date to EUR5.4 billion.

Wise sis up 1.4% after it delivered double-digit growth in customer numbers, volumes and revenue in the first quarter of its financial year, stating it expects to be more profitable over the full year. It had 6.7 million customers at the end of the period, up 33% from the year before as it continued to attract new ones through word of mouth. As a result, volumes increased 16% to £28.2 billion and revenue rose 29% to £240 million. It reiterated its ambition of growing its topline by 28% to 33% and keeping an ‘elevated’ adjusted Ebitda margin over the full year.

Darktrace is up over 18% after it said it expects annual revenue to rise 31% and that it can deliver an adjusted Ebitda margin of ‘at least’ 22% this year as it predicted improving economic conditions and a boost from recent investments in the second half. That came as Darktrace said it does not expect an independent third-party review of its accounts by Ernst & Young to have any impact on its previous financial results. Another review by Grant Thornton also resulted in ‘no key findings’. ‘We are pleased that EY has concluded its review and with the cooperation and transparency EY received from Darktrace employees at all levels. This has further reinforced the Board's confidence that Management has set a tone and culture consistent with good governance.  Separately, the AQR team's review of Grant Thornton's audit for 30 June 2022, which identified no key findings, reinforces the confidence we have always had in the robustness of the audit process and the resulting independently audited public company financial statements. We trust that all stakeholders are reassured by these outcomes,’ said chairman Gordon Hurst. The review was launched earlier this year in wake of a short seller attack.

Woodside Energy is down 1.3% after it warned a review has revealed the first phase of the Sangomar field development will cost more than originally expected because remedial work needs to be completed on the floating production, storage and offloading facility. It said the total project costs will now be $4.9 billion to $5.2 billion, up from the previous budget of $4.6 billion. First oil is not expected until mid-2024, despite the project being 88% completed. CEO Meg O’Neill said the remedial work was ‘unexpected’ and is now the ‘highest priority’. This will not impact production in 2023.

Synthomer is up 2.8% after it said it does not expect a recovery in customer demand to take off before the end of 2023 but said it is taking action to ensure it is well-positioned for profitable growth when things do bounce back. The firm said revenue came in at £1.1 billion in the first half while adjusted Ebitda will be in the range of £72 million to £74 million. That will be down from the £1.3 billion in sales and £173.1 million in Ebitda delivered the year before. It has tried to counter lower volumes with higher prices but customers have continued to destock and demand remains subdued. It said it has identified £20 million of ‘self-help measures’ that will mostly be booked in the second half, which should help it improve its performance relative to the first. Debt stands at 5.5x annual adjusted Ebitda.

Boohoo Group is down 0.6% after it said it has signed a settlement agreement with Revolution Beauty, in which it owns a significant stake. Revolution Beauty shares are up 6.8%. The deal will shake-up Revolution Beauty’s board as CEO Bob Holt and non-executive chairman Derek Zissman will both stand down. In turn, Boohoo’s deputy chairman Alistair McGeorge as well as Neil Catto, Rachel Horsefield and Peter Hallett will join the board, with McGeorge to become executive chairman. Elizabeth Lake will remain as chief financial officer. In return, Boohoo has withdrawn its requisition for a general meeting, when it planned to try to oust Revolution’s board. Boohoo has been pushing for change after flagging ‘serious concerns’ about the board earlier this year. Notably, several of Revolution Beauty’s board were voted out at a shareholder meeting not too long ago, but they were immediately reappointed.