Investment accounts
Adult accounts
Child accounts
Choosing Fidelity
Choosing Fidelity
Why invest with us Current offers Fees and charges Open an account Transfer investments
Financial advice & support
Fidelity’s Services
Fidelity’s Services
Financial advice Retirement Wealth Management Investor Centre (London) Bereavement
Guidance and tools
Guidance and tools
Choosing investments Choosing accounts ISA calculator Retirement calculators
Shares
Share dealing
Choose your shares
Tools and information
Tools and information
Share prices and markets Chart and compare shares Stock market news Shareholder perks
Pensions & retirement
Pensions, tax & tools
Saving for retirement
Approaching / In retirement
Approaching / In retirement
Speak to a specialist Creating a retirement plan Taking tax-free cash Pension drawdown Annuities Investing in retirement Investment Pathways
FTSE 250 movers: Kainos slumps on sales warning; Bodycote gains on Berenberg note
(Sharecast News) - FTSE 250 (MCX) 21,001.82 -0.40% IT provider Kainos said it expected full-year revenues to be below market forecasts due to the tougher trading environment in services as clients delayed decisions on projects, but adjusted pre-tax profit would be in line with consensus estimates.
The consensus revenue and profit figures are £415.5m and £79.1m respectively. Full-year 2024 reported revenue was £382.4m.
Kainos on Monday said digital services had seen sustained demand from public sector clients "offset by some delays around project mobilisation as result of the short-term impact of the UK General Election", while healthcare revenues continued to grow, but "weakness in demand within our commercial clients continues as project related expenditure decision making is delayed".
"Overall, there has been a subdued start to the year but expect to see revenue growth over the remainder of this year."
The group said while its "win rate" within its Workday Services division "remained robust", contract wins have been lower than in previous periods along with "more aggressive pricing amongst partners".
"Cumulatively, this has impacted our divisional performance in the short-term although we expect a return to growth in the second half of the year," it added, citing a more upbeat outlook on the back of an enhanced strategic partnership it announced in July with Workday to co-sell products.
Kainos said its annual recurring revenue (ARR) target for the division had doubled to £200m as a result.
Broker Shore Capital said it was expecting to leave unchanged full-year forecasts of 3% growth in adjusted pre-tax profit to £79.7m.
"We note that Kainos looks forward 'with confidence to the remainder of the year, supported by a healthy pipeline, a strong balance sheet and significant contracted backlog'. We believe Kainos remains well positioned in its core markets, and that these offer substantial growth opportunities over the medium term," ShoreCap said in a note to clients.
"Kainos benefits from long-term customer relationships, international expansion and diversified revenues across customers, end markets and geographic regions. The company remains exceptionally resilient and well-managed, in our view, as evidenced by an adjusted diluted earnings per share compound annual growth rate of 25% between full-year 2019 and 2024."
Bodycote was higher after Berenberg initiated coverage on the stock at 'buy'.
"Bodycote's financial framework is targeting 20% operating margins in the medium term, with low-investment requirements and self-help opportunities, gearing towards industrial cyclical recovery and strong cash generation, which we believe is undervalued at current levels compared to the industrial engineering sector," the bank said.
It said Bodycote is an early-cycle operationally-geared industrial recovery play.
"While industrial indicators are weak and visibility is low, along with other factors we note here, the exposure to a recovery is very high compared to our broader industrials coverage," Berenberg said.
"Furthermore, on a 12-month view, with comps easing and the likelihood of industrial markets stabilising, we believe that there is the potential for earnings to accelerate, although we also note that our EPS forecasts for 2025 are slightly ahead of consensus forecasts."
In addition, it said Bodycote has one of the highest exposures in the bank's coverage to attractive aerospace and defence markets, which should underpin group growth in the medium term.
Berenberg noted that Bodycote has historically maintained a strong balance sheet, with low investment requirements and resulting strong cash generation.
"This provides scope for further M&A and improved returns to shareholders, in addition to the current £60m share buyback," it said.
Berenberg also pointed to an attractive valuation, with Bodycote trading on 12.7x FY 2024E price-to-earnings and 10.1x FY 2024 EV/EBIT.
"These are substantial discounts to Bodycote's own historical levels as well as the sector relative history of 15% and 16% on a P/E basis respectively," it said.
"The stock has rarely traded this low in comparison to its sector, thus suggesting to us that the stock is pricing-in a lot of cyclical headwinds and not much credit for self-help initiatives."
Market Movers
FTSE 250 - Risers
Wood Group (John) (WG.) 134.60p 2.67% ICG Enterprise Trust (ICGT) 1,244.00p 2.13% British Land Company (BLND) 419.80p 2.09% CMC Markets (CMCX) 319.50p 1.91% Bellway (BWY) 3,088.00p 1.78% Derwent London (DLN) 2,376.00p 1.71% Great Portland Estates (GPE) 341.50p 1.49% IP Group (IPO) 42.40p 1.44% Baltic Classifieds Group (BCG) 288.00p 1.23% Trainline (TRN) 303.60p 1.20%
FTSE 250 - Fallers
Kainos Group (KNOS) 945.00p -14.56% Auction Technology Group (ATG) 400.00p -3.96% Alpha Group International (ALPH) 2,495.00p -3.29% Watches of Switzerland Group (WOSG) 382.80p -3.19% Morgan Sindall Group (MGNS) 2,895.00p -3.18% Discoverie Group (DSCV) 641.00p -3.17% QinetiQ Group (QQ.) 466.80p -3.07% Wizz Air Holdings (WIZZ) 1,295.00p -2.92% Rathbones Group (RAT) 1,836.00p -2.65% XPS Pensions Group (XPS) 295.00p -2.64%
Share this article
Related Sharecast Articles
Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.
Award-winning online share dealing
Search, compare and select from thousands of shares.
Expert insights into investing your money
Our team of experts explore the world of share dealing.
Policies and important information
Accessibility | Conflicts of interest statement | Consumer Duty Target Market | Consumer Duty Value Assessment Statement | Cookie policy | Diversity, Equity & Inclusion | Doing Business with Fidelity | Diversity, Equity & Inclusion Reports | Investing in Fidelity funds | Legal information | Modern slavery | Mutual respect policy | Privacy statement | Remuneration policy | Staying secure | Statutory and Regulatory disclosures | Whistleblowing programme
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
This website is issued by Financial Administration Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) (FCA Register number 122169) and registered in England and Wales under company number 1629709 whose registered address is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.