Trending tickers: JD Sports | Direct Line | Palantir Technologies | PayPal
A look at the stocks making headlines on Tuesday
JD Sports (JD.L)
Shares in retailer JD Sports climbed more than 3% on Tuesday to put it top of the FTSE 100 (^FTSE) as investors cheered the announcement of its proposition to acquire France-based Courir.
The British company offered to buy Courir for €520m ($570.9m, £452.4m) which includes paying €325m through existing cash resources and taking on €195m of debt. However, the deal is not expected to be completed before the second half of the year.
Victoria Scholar, head of investment, Interactive Investor said: “Courir is a French leading retailer in trainers, with 16% market share and 250 stores in France as well as significant e-commerce sales. Private equity firm, Equistone Partners Europe acquired the business in late 2018.
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“In February JD Sports outlined ambitious expansion plans including spending £500-600m a year with over half of this on new stories. It is also targeting double-digit revenue growth and operating margins. The acquisition of Courir is its first deal since outlining the new strategy this year, and will help JD Sports to expand its footprint in France.”
Scholar said this could also spell the start of further M&A at JD Sports to accelerate its growth strategy.
JD Sports’ stock boost on Tuesday extended the retailer’s year-to-date gain to almost 29%.
Direct Line (DLG.L)
Shares in Direct Line fell nearly 6% in morning London trade after the insurer reported a “challenging” earnings outlook.
The group reported a 9.7% rise in quarterly gross written premiums to £805.7m, buoyed by price increases to cope with a challenging motor insurance market.
The British company also said it expects more adverse claims in motor, especially in relation to damage, to pressure its earnings in 2023.
Jon Greenwood, acting CEO of Direct Line, said that the company’s focus continues to be on restoring the capital strength of the group and improving motor margins, where “good progress” has been made.
“Whilst 2023 earnings outlook continues to be challenging, the group has many strengths, and we continue to take the actions required to drive business performance. Our ambition over time to generate a net insurance margin of above 10% remains," he added.
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Russ Mould, investment director at AJ Bell, said: “After a miserable 2022 which saw the insurer bombarded with claims caused by extreme weather conditions and a spike in the cost of fixing problems, Direct Line dusted off its crisis management playbook and got to work addressing its issues.
“A share buyback was paused, the dividend was suspended, the CEO was given the boot and it started to push up prices for insurance policies. Sadly, it wasn’t a simple ‘click your finger and everything is fixed’ situation. The adverse claims trend is still intact.”
Shares in fellow motor insurer Admiral (ADM.L) also dropped by nearly 4% as investors worried about the wider impact.
Palantir Technologies (PLTR)
Shares in US company Palantir Technologies, which specialises in big data analytics, climbed nearly 14% on Tuesday after the company said it expects to turn a profit every quarter in 2023, betting on interest "unlike anything we have seen" in its new artificial intelligence platform.
The new generative AI platform was launched two weeks ago and works on the same technology that's behind ChatGPT.
Investors were further encouraged by the company beating first-quarter revenue, which rose 18% to $525.2m, and on profit expectations for bigger projects from existing commercial and government clients.
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The company’s chief executive, Alexander Karp, said the first iteration of the AI platform will be made available to some customers this month, and said clients include “one of the largest insurance companies in the world”.
Meanwhile, Palantir is continuing to tighten its cloud spending and said it is investing in focus areas like AI.
For the second-quarter, Palantir sees revenue of $528m to $532m, slightly below the consensus forecast of $536.2m, per Refinitiv data, with adjusted income from operations of $118m to $122m.
Shares in PayPal took a hit on Tuesday with its stock down nearly 11% despite beating first-quarter earnings estimates.
It posted revenues of $7.04bn for the quarter ending March 2023, surpassing the Zacks Consensus Estimate by 0.69%. This compares to revenues of $6.48bn a year before.
Zacks said the company has also topped consensus revenue estimates three times over the last four quarters.
Moreover, PaPal’s total payment volume was up 10% on a year-over-year basis and the technology platform and digital payments company also raised its full year forecast.
However, the pressure on its share price could be a result of second quarter adjusted EPS at the low end of the range of $1.15 to $1.17, while analysts were looking for $1.17.
According to Zacks Equity Research, Paypal shares have added about 5.3% since the beginning of the year versus the S&P 500's (^GSPC)gain of 7.7%.
Watch: PayPal stock falls despite Q1 earnings beat
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