Markets pick up pace, Drax hit by government rejection and Moonpig on a roll

“Investors continued to bid up stocks as worries about the banking system faded away, with the FTSE 100 having risen nearly 3% since the start of the week. The market was lifted by a broad range of sectors including retail, banking, travel and property,” says Russ Mould, Investment Director at AJ Bell.

“That suggests confidence is rebuilding among investors who have been shaken by the rapid unfolding of issues concerning a handful of US and European banks, and as expectations for interest rates once again swerved in a new direction.

“Petrofac soared by more than 60% after winning a place on a framework agreement to help expand offshore wind capacity in the Dutch-German North Sea. Judging by the previous share price trend, Petrofac needed all the good news it could get, as the stock had slid from circa 600p in 2018 to 50p last week.

“The wooden spoon went to Drax after the government said its BECCS (biomass project with carbon capture and storage) had not been selected for Track-1 development.

“Quite a few companies saw their share prices dip as they traded without the rights to the next dividend, including Aviva, Taylor Wimpey, Mondi and Moneysupermarket.”

Moonpig

“Many people had been quick to write off Moonpig as a Covid winner and a post-pandemic loser. Plenty of companies saw a boom in trading as people were stuck at home in 2020 and 2021 but lost their mojo as the world returned to normal.

“Moonpig’s latest trading update proves this theory wrong for the card seller thanks to a sales boom around Mother’s Day.

“However, there are still reasons to be slightly sceptical. It says growth will be weighted towards the end of its new financial year, i.e., the six-month period ending 30 April 2024. That emphasises how it is a seasonal business with calendar events such as Christmas, Valentine’s Day and Mother’s Day key sales drivers.

“Since joining the stock market, Moonpig has been at pains to explain its strategy of generating revenue from a broader base of items and to smooth out its revenue across the year. Gifts were the key to its growth, offering people the convenience of being able to send chocolates, flowers or even facilitating a skydive. That part of its growth plan hasn’t quite worked out as planned.

“Ultimately Moonpig still has a big job to prove that it can deliver on the hype around the stock at the time of its IPO. Namely proving there is structural shift to buying goods online. The recent messages from high street card seller Card Factory would suggest there is still life in physical stores so Moonpig needs to work harder to deliver the goods.”

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