Shares round-up: Morgan Sindall, AO World, Bellway, Gamma, Tullow

A brighter session for mid-cap investors was today led by Morgan Sindall Group (LSE:MGNS) after the construction services and fit-out group upgraded guidance with the ink barely dry on annual results.

There were also stronger sessions for AO World (LSE:AO.) and housebuilder Bellway (LSE:BWY), as well as for FTSE 250-bound Gamma Communications (LSE:GAMA) and the former mid-cap stock Tullow Oil (LSE:TLW).

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The FTSE 250 reached mid-afternoon back above the 20,000 threshold following a rise of 140 points, with Morgan Sindall the best performer with an advance of 250p to 3,290p.

Source: TradingView. Past performance is not a guide to future performance.

This followed a brief update in which it said its Morgan Lovell and Overbury fit-out division had experienced an acceleration in its trading momentum since annual results on 26 February.

The division is now expected to exceed both the group's previous expectations and the top-end of its recently revised medium-term earnings target of £60-£85 million.

The office-focused division generates cash to support the wider group’s investment in affordable housing and mixed-use regeneration.

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Broker Panmure Liberum said: “Morgan Sindall is a cautious management team with a strong track record. For them to update so early in the year is a sign of real confidence in fit out. Of course, it does not rule out other upgrades later in the year.”

AO World shares rallied 4p to 100p after the online electricals retailer said adjusted profit for the March financial year is expected to be at the top end of its previously upgraded guidance range of £39 million to £44 million.

This follows growth of about 30%, well ahead of the 12% for retail revenues as the business continues to benefit from its focus on margins, profitability and cash generation.

John Roberts, founder and chief executive, said the company was “back to being a highly efficient growth machine”.

He highlighted good momentum heading into the new financial year, leading to guidance for another year of double-digit revenue growth in Retail and for profits to keep growing faster than sales.

Peel Hunt, which has a price target of 115p, said AO’s ‘pivot to profit’ strategy was now fully embedded after three years, and that the opportunity has switched to wider growth - particularly in other categories.

Bellway shares rose 72p to 2,484p after a reassuring set of interim results reiterated expectations for volume output of at least 8,500 homes in the financial year to 31 July. This is up from the previous year’s 7,654.

In the seven weeks since 1 February, the private reservation rate per outlet per week was 0.76 compared with 0.67 for the same point last year.

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Pre-tax profits rose 19.9% to £140.8 million, and the company increased the dividend for payment on 1 July by 31.3% to 21p a share.

UBS has a price of 3,500p, while Peel Hunt is at 3,000p. The latter said: “We see reasonable value at these levels, but turning significantly more positive would require more conviction on the scale and rate of recovery and subsequent Return on Equity, which at 5-6% remains depressed versus historic levels.”

Annual results by AIM-listed Gamma Communications helped shares rebound 46.4p to 1,252.4p, having fallen by more than 20% since the business telecoms provider upgraded guidance in September.

The results offered reassurance after the recent bout of selling, with revenues and earnings growth of 11% and 10% respectively slightly more than expected.

In keeping with 10-15% increases every year since its IPO in 2014, Newbury-based Gamma declared a 14% hike in the dividend due for payment on 19 June to 13p a share and also announced a new £50 million buyback.

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It added that trading at the beginning of 2025 has begun with good progress in Europe, in particular in Germany, as it continues to integrate recent acquisitions.

Gamma, whose valuation of £1.1 billion makes it one of the 10 largest stocks on AIM, confirmed that it will switch to a main market listing on 2 May. This means it is in line for inclusion in the FTSE 250 index in the next quarterly reshuffle.

Former FTSE 100 stock Tullow Oil rose 0.8p to 14.8p amid a significant few hours for the debt-laden oil and gas explorer. As well as today’s in-line annual results, it said last night that it planned to sell its Gabonese subsidiary to state-owned Gabon Oil Company for $300 million.

Shore Capital said: “This marks another stage of delivery in management’s plan to reduce net debt towards a target of under $1 billion and refinance its capital structure during 2025.” The bank continues to rate the stock Buy with a 40p fair value estimate.