Trainline launches buyback amid strong growth and THG shares slump on results

“The miners were doing the heavy lifting for the FTSE 100 on Thursday morning amid positive broker commentary on the sector,” says AJ Bell investment director Russ Mould.

“Inflation data from the US yesterday was mixed but there wasn’t anything in there to cause major alarm for either investors or the Federal Reserve, even if energy prices are starting to become a relevant inflationary pressure again.

“The next big test for markets comes later today as the European Central Bank gears up for its latest interest rate decision. Somewhat unusually, given central bank judgements are often heavily trailed or hinted at, there has been a big swing in expectations on what the ECB might do, with hopes for a pause fading in recent days and a 25-basis point hike now the assumed outcome. 

“The ARM IPO price of $51 is in and all the talk is the float has been priced to pop on its debut later on. The market valuation is still a long way short of the $64 billion implied by internal dealmaking at current owner Softbank last month, but if the bankers advising the company called it right then the chip designer could be approaching those levels sooner rather than later.” 

Trainline

 “Investors are getting on board the love train for online rail ticketing platform Trainline. Despite another period marred by industrial action, the group has seen an eye-catching increase in ticket sales, suggesting it is gaining traction with travellers not just in the UK but overseas too.

 “This is an exciting development for the company given European rail is cheaper, more reliable, has better infrastructure and therefore potentially wider appeal. 

 “A share buyback puts shareholders on track for added returns and the one big threat in its UK market – the launch of a Great British Railways state-backed hub for tickets – seems to have receded into the distance.

 “There remain limited barriers to entry in this market, but Trainline’s brand is becoming increasingly entrenched, which should provide it with a measure of protection from any prospective rivals. The company continues to focus on innovative features like flagging cost savings through splitting your journey into multiple tickets that cost less in total than one ticket for the whole route.”

THG

“Digital commerce platform THG continues to face an uphill battle to be seen as a credible business with the market.

“Another period of operating losses and with more moving parts than a Swiss watch, it’s no wonder that investors struggle to get their head around exactly what this company is trying to do. The word ‘adjusted’ is used 118 times in the half-year results, which says it all. 

“The nutrition business looks to be improving, helped by inflationary pressures easing. It wants to build sports nutrition brand Myprotein into a global lifestyle brand – notably, this part of its business has been the focus of activist investor Kelso which has called it one of THG’s undervalued assets.

“THG seems to realise that something has to change if it is to win over the market’s favour, hence the recent disposal of two loss-making businesses. That reinvention journey needs to speed up if it wants the share price to move higher. As it stands, the latest results went down like a lead balloon with the market, the shares falling nearly 18% in the first hour of trading.”

These articles are for information purposes only and are not a personal recommendation or advice.