MARKET REPORT: Babcock shares shot to three-year high

Shares in defense group Babcock hit their highest level in more than three years after an upbeat update for investors.

In a statement ahead of its annual general meeting, the company said “trading has been encouraging since the start of the new financial year in April.”

The company, which maintains Britain’s nuclear submarine fleet and builds the Royal Navy’s Type 31 frigates, cited “good” revenue growth and “improved operating performance” as well as higher cash flow than a year ago.

“Babcock International appears well placed to deliver solid earnings growth in the medium term,” said analysts at Peel Hunt.

Shares rose 5.5 per cent, or 21.2p, to 409.6p, their highest since June 2020.

Boost: Babcock, which services Britain’s nuclear submarine fleet, cited ‘good’ revenue growth and ‘improved operating performance’

The share price’s recovery from lows of under 200p in early 2021 is a welcome boost for investors after a decidedly difficult period.

The company, which also services the Challenger 2 tanks supplied by the UK to Ukraine, was thrown into turmoil five years ago by a damning report by Boatman Capital Research. And despite the recent rally – driven in part by increased defense spending following Russia’s invasion of Ukraine – shares remain well below their 2014 peak of just under 1,300p.

Amid ongoing concerns about the state of the global economy – from high interest rates in the US to a housing crisis in China – the FTSE 100 rose 0.1 percent, or 8.63 points, to 7,601.85, while the FTSE 250 rose 0.7 percent or 121.55 lost to 18098.68.

The mid-cap index’s biggest loser was Digital 9 Infrastructure, which invests in everything from undersea fiber optic cables to data centers. Shares in the company, which has debts of £1.3 billion, plunged 39.5 percent, or 21.9 pence, to 33.5 pence after it posted half-year losses of £57.4 million in the same period made a profit of £27.4 million last year.

HSBC is reportedly in talks to acquire Citigroup’s consumer wealth management business in China, which manages assets worth over £2.5 billion. Shares rose 0.8 percent, or 5 pence, to 644.9 pence.

British life insurer Phoenix Group reported a small increase in profits amid continued demand for its corporate pension insurance policies. But shares fell 7 percent, or 35.4 pence, to 472.4 pence.

It was another good day for Ithaca Energy investors. Shares rose almost 9 percent on Wednesday after the Rosebank oil field in the North Sea, which the company operates jointly with Norway’s Equinor, was given the green light. The shares rose a further 3.4 per cent, or 6p, to 183.6p yesterday.

However, there has been some profit-taking at Oxford BioDynamics after its share price rose 184 percent in the last two sessions. The rise came after the company launched its “highly accurate” prostate cancer test in the UK and US. But after two stormy sessions, shares fell 7.2 per cent, or 2.2p, to 28.5p.

All Bar One owner Mitchells & Butlers is benefiting from customers coming to eat and drink despite rising prices.

The group, which also includes chains such as Toby Carvery and Harvester, reported a 9.7 per cent rise in sales in the fourth quarter to September 23.

It said cost pressures for the company had “eased” after a year of hospitality businesses being hit hard by rising inflation, supply chain issues and rising staff wages.

Sales growth was also strong despite the ongoing cost of living crisis: In the fourth quarter, food sales rose 11.6 percent, while beverage sales rose 6.4 percent. Shares rose 4.3 percent, or 9.2 pence, to 223.8 pence.

Hydrogen fuel cell maker Ceres Power said half-year losses widened to £26.3m this time from £22.6m in 2022. Shares in the company, which recently joined the FTSE 250 index, fell 0.8 percent, or 2.6 pence, to 326.8 pence.