Top UK Stocks to Watch: Kainos shares jump on bright outlook
Joshua Warner January 22, 2021 8:58 AM
Kainos continues to grow as it helps the NHS with its pandemic response, Mediclinic’s performance improves as elective surgeries start again, Computacenter bumps up its profit guidance, and GlaxoSmithKline gets US approval for a game-changing HIV treatment.
Top News: Kainos ‘well-positioned’ to grow despite coronavirus challenges
IT company Kainos said it expects to beat expectations in the current financial year and that it is well-positioned to keep growing despite the challenges presented by the coronavirus pandemic.
‘The continued momentum in our business has driven a strong trading performance and we therefore expect results for the year ending March 31, 2021 to be ahead of current market consensus expectations,’ Kainos said.
Kainos is working on several large long-term contracts helping the UK government get its digital act together, including supporting the NHS with its COVID-19 response.
It has also continued to win consulting contracts thanks to the global reach of Workday Practice, the finance, HR and planning suite of services. Smart, its automated testing platform for Workday, has continued to acquire new clients with a particular focus on North America.
In November, Kainos delivered strong growth when it released its interim results covering the six months to the end of September, with revenue jumping 23% year-on-year and pretax profit doubling. Its performance was so strong that it not only raised its interim payout by 83% but also paid an even larger special dividend.
‘We are mindful of the on-going challenges caused by Covid-19 and EU Exit, but we believe that we are well-positioned for further growth and we remain confident in our strategy,’ Kainos said this morning. ‘Looking ahead, our robust pipeline, strong balance sheet and significant contracted backlog underpins our confidence in our outlook.’
Kainos will release annual results covering the 12 months to March 31 on May 24.
Kainos share price: technical analysis
Kainos shares have been trending higher since its mid March low, confirmed by the upward trending 100 day sma on the 4 hour chart.
However, more recently the share price has been in a downward trending pattern, trading below a descending trendline dating back to late October.
Today’s jump higher has seen the share price break out above the near term descending trendline. It has also taken the share price above the 50 &100 sma in a bullish signal. The RSI also favours more upside.
The price is currently testing horizontal resistance at 1300. A meaningful move beyond here could see 1400 all time high come back into focus. Although keep an eye on the RSI for overbought territory.
Immediate resistance is seen at 1240 the descending trend line resistance turned support prior to 1200 50 sma and 1150 100 sma
FTSE 100 news
Below is a guide to the top news from FTSE 100 shares today.
GSK: Cabenuva to revolutionise treatment of HIV
GlaxoSmithKline said ViiV Healthcare has secured approval from the US Food and Drug Administration for Cabenuva to treat HIV.
The pharmaceutical giant said Cabenuva is ‘the first and only complete long-acting regimen for the treatment of HIV-1 infection in adults’. Lynn Baxter, the head of ViiV’s North American operations, said the approval ‘represented a shift in the way HIV is treated’ by providing a completely new approach to care.
It said people using Cabenuva will only need 12 doses every year compared to a daily oral treatment at present.
‘Among the scientific community, we recognize the innovation behind Cabenuva is truly meaningful. Not only is it the first, complete long-acting regimen, which allows for a dramatic reduction in the frequency of dosing, but it also was preferred by most clinical trial participants when compared to their prior daily oral regimens. The FDA approval of Cabenuva underscores the value of community-centric research and I am pleased this new option will be available for those living with HIV,’ said David Wohl, professor of medicine at the University of North Carolina Institute of Global Health and Infectious Diseases in Chapel Hill.
The first doses will start to be distributed in the US next month.
ViiV is majority owned by GSK alongside minority shareholders Pfizer and Shionogi.
GSK shares were up 0.4% at 1373.7 in early trade.
FTSE 250 news
Below is a guide to the top news from the FTSE 250 today.
Computacenter bumps up profit guidance by £5 million
Computacenter said it has bumped up its profit guidance for 2020 after continuing to perform well in the latter part of the year.
The company, which helps companies with their IT infrastructure, said it now expects to make adjusted pretax profit of £195 million in 2020 compared to its previous target of £190 million given in December.
That would be up 33% from the £146.3 million delivered in 2019.
Revenue in the year grew 8% in the year, boosted by the acquisition of Pivot Technology Solutions in North America and BT Services in France in November. Excluding the acquisitions, revenue edged up 3%.
It said demand for its technology sourcing business had continued to grow in the public sector and the services industry, but declined from the manufacturing and industrial sectors. It services division remained steady but margins improved after it cut contractor spend. Better margins combined with lower costs, driven by reduced travel, allowed it to improve profitability in the year.
‘The positive momentum we have seen in trading since the start of the pandemic shows no sign of abating, and our pipelines for both Technology Sourcing and Services are as strong as at any time we have seen in the last year,’ said Computacenter.
‘While it is impossible to predict when or how our customers will react as the pandemic reduces its impact on our day to day lives, given the momentum we have in the business which is obviously further aided by our acquisition in the US, we are as confident as we can be at this stage that 2021 will be a year of progress for the group,’ it added.
Computacenter will release annual results on March 16.
Computacenter shares were up 3.8% in early trade at 2542.0.
Mediclinic sees uptick in patients but coronavirus still weighs on services
Mediclinic said revenue grew in the third quarter as it was able to restart elective procedures and because of a ‘unseasonably high’ number of inpatients during December.
Mediclinic, a private healthcare group operating in Switzerland, South Africa, Namibia and the UAE, said revenue grew by 2.5% in the third quarter to the end of December. However, its earnings before interest, tax, depreciation and amortisation fell 8% as its margin slipped to 17% from 19%.
It said a more severe second wave of coronavirus placed pressure on its acute care capacity during the period, having now managed over 30,000 coronavirus patients. However, there was not restrictions on elective surgeries like there was earlier in 2020, allowing it to restart procedures when it had the capacity. It also saw ‘unseasonable demand’ in Southern Africa and in the UAE during December, which boosted its performance.
Notably, the Dubai Health Service implemented a four-week suspension of elective surgeries on January 21.
It said it had access to £660 million of cash at the end of 2020, level with the end of September, and that cash conversion in the financial year-to-date had improved to 59% from 42% at the end of the first half. It is aiming to get that up to 90% to 100%.
‘The uncertainty caused by the pandemic has reduced visibility on activity levels and therefore the group remains cautious as to the full impact on near-term operating performance. As previously guided, the impact of national lockdowns and restrictions on non-urgent elective care results in the postponement of patient treatments. When capacity becomes available, the group is well positioned to deliver the services and care required to address patient demand,’ the company said.
Mediclinic will release a full-year trading update sometime in mid-April.
Mediclinic shares were down 1% in early trade at 295.8.
Ninety-One sees AUM grow
Ninety-One, formerly Investec Asset Management, released a brief statement that said assets under management totalled £128.6 billion at the end of December, up from £119 billion at the end of September.
Ninety-One shares were down 0.7% in early trade at 235.1.
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