Shares round-up: Dr Martens, De La Rue and Bodycote on the move

A positive step by Dr Martens, progress at City “top pick” Bodycote and a break-up development at De La Rue today ensured the trio’s shares kept up recent momentum.

The results of Dr. Martens Ordinary Shares (LSE:DOCS) were in line with expectations, including a 43% drop in pre-tax profits to £97.2 million after a year blighted by weak US consumer demand.

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Its FTSE 250-listed shares still rose 2.8p to 86.7p, extending their recovery to almost 30% since the boot-maker landed the fifth in a series of profit warnings in April this year.

Today’s rise reflected relief at no change in the company’s planning assumptions for a return to growth in 2026, as well as a new pledge to target cost savings of £20-25 million.

In the near-term, however, a focus on increased US marketing investment in the year ahead will contribute to another big drop in profits for this financial year.

Chief executive Kenny Wilson said: “I am confident that the actions we are taking as we enter this year of transition will put us in good shape for the years ahead.”

Wilson is leaving after six years and is due to be succeeded by the company’s chief brand officer Ije Nwokorie, who was previously senior director for Apple Retail.

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Broker Peel Hunt, which today reiterated a 70p price target, expects a long-burn recovery that could leave the business vulnerable to bid interest.

The City firm said: “We have no long-term concerns over the brand, quite the opposite in fact, but financial recovery will likely lag a consumer-led pick-up from peers.”

Peel Hunt is more upbeat about Bodycote (LSE:BOY) after the heat treatment and specialist thermal processing firm reported a robust performance in the first four months of the year.

Aerospace and defence growth of 16% more than offset a mixed backdrop for automotive & general industry, while higher margin Specialist Technology materially outperformed.

The shares lifted 10p to 742p and have risen by about 25% this year. They topped 1,000p in 2018 when investors bought into its higher margin growth story, but have since suffered under the weight of macroeconomic factors to stand as low as 565p last October.

Peel Hunt said today’s update increases its confidence in a company at the front end of the industrial recovery cycle and with opportunities enhanced by the breadth of its portfolio, including the significant growth driver of Specialist Technologies.

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Bodycote is one of the broker’s industrial top picks for 2024, alongside IMI (LSE:IMI) and TI Fluid Systems (LSE:TIFS), with a target price of 1,000p. Analysts at Jefferies also reiterated an upside to 980p following today’s AGM statement.

They said: “We are bullish on the aerospace and defence outlook, in particular, and there is scope for an improved automotive and general industry outlook later in the current year, along with margin upside to a very healthy level of 20%.

“Additionally, the group’s Specialist Technologies are a valuable and under-appreciated element of the equity story.”

De La Rue (LSE:DLAR) shares rose 2p to 100p, extending gains since mid-April to 29%, as it disclosed talks are ongoing with parties interested in either of its currency and authentication divisions.

The potential break-up disclosure follows the announcement of a strategic review at December’s interim results. On the trading front, De La Rue said currency’s order book had increased to £239 million at the end of March, with further orders totalling £60 million since then.

This compares to £137 million at the end of 2023 and £220 million in December. The Authentication division also holds multi-year contracts with anticipated future revenues of over £350 million, equivalent to about three and a half times 2024’s total.