Wise PLC's 1Q Deceleration Remains a Concern for Long-Term Trends

1244 GMT - Wise PLC's better pricing compensated continued declining average volumes per customer but the decelerating trend poses risks in the long run, Citi says. The money transfer company's first-quarter results showed net interest income drove in-line volumes and a revenue beat. "Gross interest income growth is a clear positive, but the slowing growth in the operating business remains a concern for us (albeit somewhat flagged by management at the recent update)," analyst Andrew Gardiner writes. Volumes trends are the most important factor for long-term prospects though pricing and interest boost financials in the near-term, he adds. Shares, which are up 24% year to date, trade 3.8% higher at 698 pence. (elena.vardon@wsj.com)

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Arbuthnot Banking's Continued Profitability Relies on Rates

1206 GMT - Arbuthnot Banking Group's outlook its cautiously positive despite net interest rates nearing their peak, Shore Capital says in a note after the lender's first-half results. "[Return on equity] of c.18% in H1 FY23 probably reflects near peak-in-cycle net interest margins, which we assume will compress over the medium-term as the prices ARBB pays for deposits rise to catch up with the [Bank of England] base rate," analyst Vivek Raja writes. Though its business model is built on a normalized interest-rate environment, which has helped its sharp recovery in profitability since 2021, the bulk of the profitability from the higher net-interest rates should largely have played out--assuming the interest-rate tightening phase is mostly complete--Raja says. Shore has Arbuthnot as a house stock. Shares rise 18% at 1,120 pence. (elena.vardon@wsj.com)

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Litigation Capital's Surprise Dividend Could Hint at Additional Cash Returns

1203 GMT - Litigation Capital Management's surprise dividend shows confidence in the model and opens the door for additional cash returns in the coming years, Investec says in a note. The Australia-based provider of dispute-financing solutions declared a 2.25 pence dividend on the back of strong performance and balance sheet. The prospect of future returns makes the implied yield of 2.8% on fiscal 2023 dividend estimates look even more attractive, analysts Rahim Karim and Jens Ehrenberg write. "Although we had not anticipated the group paying a dividend in either FY23E or FY24E, we have long felt the model was one which should support attractive levels of cash return at the appropriate juncture," they add. (elena.vardon@wsj.com)

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Ocado's Investor Focus Remains on Potential Takeover Bid

1146 GMT - Ocado reported a small Ebitda profit in 1H, while pretax losses continued amid a slow pace in signing up new partners, AJ Bell head of financial analysis Danni Hewson says in a note as shares rise 16%. This shows that life isn't getting any worse for the online grocer, and is enough to satisfy the market, Hewson says. However, investors are mostly focusing on whether Ocado remains a takeover target, she says. "Rumours that Amazon wanted to buy the business breathed new life into the share price in recent weeks but the retail giant has remained quiet on the speculation," Hewson notes. (michael.susin@wsj.com)

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Digital 9 Needs Good Syndication or Corporate Event to Improve Share Price

1140 GMT - Digital 9's share price has fallen significantly over recent weeks, making it the worst performer among its peer group of alternative funds with a market cap above GBP100 million, Liberum says. The digital-infrastructure investor will only achieve a sustained improvement with either a good outcome on the syndication of a minority stake in Verne Global, or a corporate event--such as a private equity bidder on the assets or the group--Liberum analyst Shonil Chande says in a note. "In the meantime, the investment manager's ability to influence the key issues around the fund's balance sheet and its dividend cover is fairly limited," the brokerage says. Liberum retains its buy rating and 94 pence price target on the stock. Shares are up 7.9% at 57.6 pence. (joseph.hoppe@wsj.com)

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Ocado's 1H Numbers Remain Grim as Limited Progress Prompts Caution

1125 GMT - Ocado's 1H performance prompts caution as the group embraced cost reductions in order to control massive losses in a changed economic and monetary environment, Shore Capital analyst Clive Black says. The online grocer didn't mention any potential bids, while comments around the partner success program continue to be vague, Black says. Added to this, there was limited progress with Kroger's expansion and the opening of two customer fulfillment centers for Coles in Australia has been put under review, he says. "The numbers remain grim, time is running out for this story, with the jam drying up," the analyst says. (michael.susin@wsj.com)

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Judges Scientific's Outlook Is Strong Following Good 1H

1115 GMT - Judges Scientific's strong first-half orders and operational performance reflect generally favorable market conditions across the company's niche and resilient end markets, something hopefully reflected in the second half, Shore Capital says. The scientific-instruments specialist's strong order book and favorable market tailwinds leave full-year estimates well underpinned, and management appears confident in meeting market expectations, Shore analysts say in a research note. "We believe that the outlook for Judges in instrumentation, from an organic development perspective, remains strong, noting secular growth factors supported by technology development, and data, education and legal compliance standards requiring instrument investment," the investment group says. Shore has Judges as a house stock. Shares are up 3.2% at 9,3490 pence. (joseph.hoppe@wsj.com)

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Just Group To Keep Benefiting from UK Bulk Annuities Demand

1113 GMT - Business is booming for Just Group, RBC Capital Markets says in a note after the provider of retirement-income products and services posted that its new business volume growth more than doubled on year for the first half of 2023. "We remain highly confident on the outlook as we expect Just Group to benefit from what we forecast will be a record year for U.K. bulk annuity volumes," analyst Mandeep Jagpal and associate Sarah Chong write, pointing to the 350-basis-point rise in gilt yields since early 2022 which has triggered a step-change in demand for bulk and retail annuities. RBC lifts its target price on the stock to 170 pence from 165 pence. Shares rise 6.5% at 82.2 pence. (elena.vardon@wsj.com)

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Darktrace Set For New Dawn After Clean Bill of Health

1051 GMT - Darktrace is strongly positioned for growth and its steep discount to U.S. peers will start to unwind as the weight of uncertainty about the company has been lifted, Goodbody says in a note after the cybersecurity company said auditor EY had completed the review of its accounts. "This is essentially a clean bill of health for Darktrace and after a thorough external inspection of accounts...should be seen as a strong positive for the business," analyst Patrick O'Donnell writes. The group's trading update and upgraded margin guidance shows resilience in a challenging market for the sector, which, along with a structural tailwind driven by an evolving-threat environment should boost growth, O'Donnell adds. (elena.vardon@wsj.com)

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Revolution Beauty, Boohoo Settlement Seen as Welcome News

1045 GMT - Revolution Beauty's overhaul of its board as part of an agreement with peer and major shareholder Boohoo is welcome news, Interactive Investor says. The agreement shows that both parties recognize the other's point of view and are likely to move forward in a more positive direction, Interactive Investor head of investment Victoria Scholar writes as shares rise 3.3%. Boohoo previously tried to remove Revolution Beauty's CEO, Chair and CFO in a public spat and the settlement to remove just CEO and Chair, preserving the CFO, will hopefully put an end to the war of words, she adds. "Shares have surged over 8% earlier this morning, pricing in Revolution Beauty's detente with Boohoo. The stock has now rebounded by an impressive 33% since trading resumed," Scholar highlights. (michael.susin@wsj.com)

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Darktrace's Update Seen Triggering Meaningful Rerating

1033 GMT - Darktrace's reassuring guidance and clean auditor review could trigger a meaningful rerating for the stock, which has been overlooked for a while, Jefferies says in a note after the cybersecurity group's fourth-quarter update. The group's successful navigation of fiscal 2023 amid macro uncertainty is encouraging and guidance for the year ahead implies a stronger second-half acceleration than Jefferies expected, which bodes well for the following fiscal year, analyst Charles Brennan writes. "The EY report has cast a shadow of uncertainty over the shares but we think this statement clears the decks in all respects," Brennan says, noting the report draws a clear line under accounting questions. Jefferies rates the stock buy. Shares are up 20% at 354 pence. (elena.vardon@wsj.com)

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ITM Power Still Needs to Show It Can Turn Orders Into Profit, Goodbody Says

1019 GMT - ITM Power's new German contract is positive news, but its ability to turn orders into profitable revenue remains a question mark, Goodbody analyst Kenneth Rumph writes in a research note. "For a customer to sign an order whilst the 12 month turnaround plan is mid way through is positive, both about the market and for ITM. Past losses/warranty provisions and delays in production mean that ITM's ability to turn orders into profitable revenues remains to be proven - a key part of our sell case," Rumph says. While the news is positive, the key news event is the final FY 2023 results on July 27, he says. Shares are up 8% at 82.28 pence. (christian.moess@wsj.com)

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UK Gilt Yields Fall Ahead of UK Inflation Data on Wednesday

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07-18-23 1056ET