Daily market update: Currys, Primary Health Properties / Assura, Moonpig

Currys

“Electronics retailer Currys continues to impress after brushing off interest from private equity last year,” says AJ Bell Investment Director Russ Mould.

“When a company rejects a bid on valuation grounds the onus is on management to demonstrate their claims weren’t hollow. Its latest update offers further evidence that the 62p per share bid was genuinely too low, with the shares managing a double-digit advance despite wider market weakness. This follows a string of upgrades to guidance over the past year or so.

“Sales in the company’s UK operation are solid and the company has seen a meaningful recovery in its Nordics business.

“Currys is one of the last remaining electronics retailers with a physical presence on the high street and it is making a virtue of this status by offering handholding when people are buying increasingly complex consumer technology. It also offers a full range of services from credit to delivery, installation, repairs and recycling, and these help it to stand out from the crowd.

“A notable feature of Currys’ recent performance is the strong cash flow which puts the company in an enviable position relative to other retailers. It potentially allows Currys to go from being prey to predator in the sector, should it spy the right opportunity.”

Primary Health Properties / Assura

“It’s not often that a rival bid will come in at a lower level than one already on the table. Yet that’s the situation at medical facilities owner Assura where its UK peer Primary Health Properties has returned to counter the current proposal from private equity firm KKR.

“PHP’s argument is that there will be benefits from the combination for both sets of shareholders, and some investors in Assura might be persuaded by this argument given KKR’s takeover would be at a price some way below the valuation the company enjoyed a few years ago.

“However, others may prefer to take the cash now and, on that basis, Primary Health’s offer looks less attractive.”

Moonpig

“Moonpig’s claims to be a high-growth tech company are looking spurious as the company is set to miss full-year sales expectations thanks to a softer second half performance.

“Nonetheless, the online greetings card seller is profitable and cash generative.

“News that margins will come in at the top end of expectations and the intention to launch a new share buyback offer compensation to shareholders and explain the shares’ outperformance of the market today.

“The culprits for the weak revenue showing are its Netherlands-focused Greetz operation and its experiences arm — an area where it has a weaker competitive position.

“Moonpig says it continues to pursue a transformation plan for experiences but if the weak performance persists it may raise questions about the long-term future of the business in the group.”

These articles are for information purposes only and are not a personal recommendation or advice.