Retail Prospects Are Encouraging Given -2-

0952 GMT - Sterling could fall as the Bank of England is unlikely to raise interest rates as much as the market expects, although the currency's performance also depends on risk sentiment, MUFG Bank says. "On its own, less BOE policy tightening will work against the pound, and pose upside risks for EUR/GBP given the European Central Bank is more strongly committed to further large hikes," MUFG currency analyst Lee Hardman says in a note. However, risk sentiment also remains important for the pound and can offset the impact from yield spreads, he says. GBP/USD falls 0.1% to 1.2166 and EUR/GBP rises 0.1% to 0.8822. ([e-mail])

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Games Workshop's 1H Results Seen as Mixed

1001 GMT - Games Workshop's 1H performance is consistent with December's guidance while the dividend was better than expected, Jefferies analysts Andrew Wade and Grace Gilberg say in a note. The miniature-wargaming company declared a dividend of 130 pence, bringing the total to 295 pence against a market consensus of 250 pence, they highlight. The company's core revenue could have increased, but it has been affected by continued delays in global projects and a fall in gross margin due to inflationary pressures, they say. "Although there is no news on the Amazon deal, the company is confident it will 'bring the worlds of Warhammer to the screen like you have never seen before'," the analysts say. ([e-mail])

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Marks Electrical Builds on 1H Success

1009 GMT - Marks Electrical Group's update shows further momentum and progress on its existing first-half success, Shore Capital research analysts Bradley Hughes and Clive Black say in a note. The online electrical retailer reported an exceptional third quarter, with 33.4% revenue growth, which is significantly ahead of the first half's around 15% and made more impressive by the tough year-earlier comparative amid the spread of the coronavirus Omicron variant, the analysts say. "We believe the statement today once again underline[s] the robust nature of Marks' business model, which is underpinned in large part by its distressed nature of demand, shielding it more than other discretionary peers," they say. Shore Capital has a buy rating on the stock. Shares trade up 3.9% at 93.50 pence. ([e-mail])

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AO World Profit Pivot Execution Looks Encouraging, Says Jefferies

1036 GMT - AO World's pivot to profit is being successfully executed, says Jefferies in a note, following the online electrical-goods retailer's guidance hike from better-than-expected delivery on cost savings and margins. The encouraging upgrade looks due to strong logistics efficiencies, improved order economics through price and a somewhat cautious guidance on overhead cost reductions, say analysts Andrew Wade and Grace Gilberg. "We continue to see a good opportunity to own a business with a strong customer proposition, a bolstered balance sheet, and a successfully shifted profit-centric strategy," they say, keeping a buy rating on the stock and raising its target price to 85 pence from 75 pence. Shares rise 2.0% at 71.0 pence, having hit 81.9 pence earlier in the session. ([e-mail])

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BT Seen With Tailwinds, But Some Clouds Linger

1039 GMT - BT Group's revenue growth should benefit from prices increases in the year ahead, but the company will face issues it needs to be mindful of in the period too, Jefferies' Jerry Dellis and Yi Hsin Yeoh say in a note. The U.K. telco's fiscal 2024 should be boosted by an around GBP700 million pricing tailwind and the accelerating monetization of its fiber-to-the-premises offering, they say. However, free cash flow looks set to be pegged back by higher taxes and the disposal of BT Sport, while the GBP13 billion of unquoted risky assets connected to its pension scheme is also a concern, they add. Jefferies keeps its buy rating on the stock, but lowers its target price to 190 pence, from 250 pence. Shares trade down 1.9% at 125.60 pence. ([e-mail])

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AO World's Guidance Hike Seen as Step in Right Direction

1052 GMT - AO World's guidance upgrade for fiscal 2023 is pleasing to see given its track record, says Shore Capital's Clive Black in a note. "Pigs are flying! AO World has been a pretty joyless place for equity investors for some years now for a variety of well-versed reasons, not least of which was a failed European adventure", the analyst says. "Now, EBITDA is not PBT, but it is a step in the right direction." The update with the lifted adjusted Ebitda target is providing some comfort and joy in the U.K. small-cap retail scene, he says. Shares are up 1.7% at 70.8 pence, having hit 81.9 pence earlier in the session. ([e-mail])

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(END) Dow Jones Newswires

01-10-23 0625ET