Shares round-up: Ocado, Ithaca Energy, Avon Technologies

Hopes that Ocado Group (LSE:OCDO) is nearing an “inflection point” and the $500 million dividend pledge of high-yielding Ithaca Energy Ordinary Share (LSE:ITH) today put their shares on top of the FTSE 250 index.

A tier lower in the FTSE All-Share, military supplier Avon Technologies (LSE:AVON) resumed the share price momentum of 2024 by issuing upgrades to revenues and margin guidance in 2025.

One of the most traded stocks across the FTSE 350 was Ocado after JPMorgan Cazenove moved to an Overweight stance, having been negative or neutral on the retail robotics firm since 2018.

• Invest with ii: Open an ISA | ISA Investment Ideas | ISA Offers & Cashback

The broker’s new price target of 400p helped the shares to jump 40.2p, but at this new level of 290p they are still below where they were before annual results on 27 February.

The turnaround optimism of JPMorgan Cazenove is built on hopes that increased online grocery adoption will feed into more deals for Ocado’s technology solutions division, which currently consists of a network of 25 customer fulfilment centres.

It also highlighted margin progress, which underpins the company’s ambition to turn cash flow positive by the end of 2026.

Ocado recently forecast a 20-25% underlying margin in the solutions division for 2025, up from 16% in the 2024 financial results. Retail is seen at 4%, compared with last year’s 2.6%.

• ii view: is Ocado post-results decline a buying opportunity?
• Insider: six stocks backed by directors to go higher

The advance of 11.9p to 154.1p by Ithaca Energy follows the North Sea oil and gas firm’s disclosure of a target to pay shareholders another $500 million in 2025.

Since its IPO in November 2022, returns have amounted to $900 million through dividends declared or paid in respect of 2023 and 2024 performance. This includes today’s plan to distribute a third interim dividend totalling $200 million in the next month.

The promise of more material returns in 2025 follow the North Sea producer’s tie-up with Eni UK, which left it with stakes in six of the 10 largest fields in the UK Continental Shelf.

The deal has made Ithaca substantially larger and a financially stronger business, with significant financing capacity to fund future growth. The shares yield dividend income of 12.7%, rising to about 20% based on Peel Hunt forecasts for the next two years.

The broker, which has a price target of 169p, said revenues of $2 billion and unit operating costs equivalent to $22.4 a barrel meant a better than expected leverage ratio in today’s results.

The company added that it is well positioned to play a pivotal role in further North Sea consolidation, including an “agile response” to continued market dislocation.

• Stockwatch: are these the next banks being re-rated?
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis

Avon Technologies rallied 58p to 1428p after the supplier of respiratory protection and military headgear systems said its strong momentum has continued through the second quarter, boosting expectations for the full year.

It now sees revenues growth in excess of 10%, up from previous guidance in the mid-single digits, and for an adjusted operating profit margin of 12% rather than 11.5%.

Peel Hunt lifted its price target from 1,400p to 1,800p following the update, having increased its 2025 revenues forecast by 7% and adjusted earnings estimate by 17%.

The shares have risen from 1,052p a year ago to 1,538p earlier this month, boosted by European NATO orders and progress on a path to a mid-teens operating margin.

The business is now split between Avon Protection, which provides respiratory and protective systems, and US-based Team Wendy as a supplier of military helmet systems.

The shares were more than 4,000p in 2020 when the company was known as Avon Rubber and a hugely popular stock for retail investors.