Graft Polymer share flew on Friday after the biopolymer company it has filed a provisional patent application with the US Patent and Trademark Office related to using its proprietary drug delivery technology for mental health treatments.

Graft Polymer shares were 35% higher at the time of writing.

The application, titled “Composition and methods for mental health disorders using a self-nanoemulsifying drug delivery systems (SNEDDS),” covers using Graft Polymer’s SNEDDS platform to improve the delivery of therapeutics for generalised anxiety disorder, major depressive disorder, post-traumatic stress disorder and other mental health conditions.

Many mental health drug compounds have poor solubility, making effective delivery a challenge. Graft Polymer’s SNEDDS technology aims to enhance bioavailability, pharmacokinetics and stability to address this obstacle.

This patent filing follows the company’s announcement last week that it applied for similar protection for using SNEDDS to deliver addiction treatment drugs. The mental health application is part of Graft Polymer’s strategic shift to focus on healthcare after divesting its industrial plastics manufacturing unit earlier this month.

“We are delighted to announce further progress in leveraging our existing biopolymer intellectual property for additional important healthcare applications with substantial unmet medical needs,” said Anthony Tennyson, Graft Polymer CEO.

JD Sports shares sank on Friday after the company signalled it was facing ‘challenging market’ conditions. Sales dropped last year, and the weakness has continued into the current year.

Readers of the company’s 2024 full-year results were met with the headline ‘Strategic Progress in a Challenging Market’ presented in big bold type at the top of the release.

Investors have focused on the latter half of this statement and dumped shares in early trade on Friday.

“Results came in later than expected and pointed to continued volatility in the market. Underlying profits landed within their previously downgraded guided range, marking an 8% fall from last year,” said Guy Lawson-Johns, equity analyst, Hargreaves Lansdown.

Falling profit will be a real disappointment for investors but this was already largely priced. The assertion the company is operating in a challenging market will do nothing to increase confidence it can bounce back in the year ahead. This did the real damage on Friday.

Indeed, sales fell again in the first quarter, highlighting ongoing softness in demand for premium sportswear. JD Sports did confirm guidance for the year but this has been met with a healthy dose of scepticism given the poor trading results so far this year.

“It also reiterated its guidance for profit to be in the £955-£1,035mn range this year, despite a 6.4% drop in sales in its home market in the first quarter,” Lawson-Johns said.

“Achieving that will be a tall order if challenging markets prevail, but through the store rollout program, the company is taking proactive steps to shape its future.”

“Since joining in 2022, CEO Régis Schultz hasn’t shied away from ambitious expansion plans in North America and Europe. With 200 new stores opened last year and another 200 planned this year, Schultz is clearly focused on growth. Fuelled by £0.5bn of additional capital spend, expansion isn’t coming cheap, but new stores exceeding internal sales expectations by 20% show early signs that the investment is working.

“With growth seemingly not coming quickly enough, the latest billion-dollar Hibbett deal will see the British footwear retailer accelerate its North American growth plans. Adding over 1,000 stores in a key growth market is an attractive proposition, and while the focus on acquisitions may leave little room to increase the dividend, gearing up for future growth could be the best use of capital.”

JD Sports were down 8% at the time of writing.

There is a bit of a renewed buzz in the market concerning the shares of technology products retail group Currys (LON:CURY).

They put on a clear 7.21% gain yesterday, closing up 5.15p at 76.60p, after a massive 7.68m shares were traded.

The sparking of interest came after broker Berenberg upgraded its view of the group’s shares, switching from Hold to Buy, while at the same time lifting its Price Objective from 67p to 90p.

Other City analysts have even higher aspirations for the shares.

Recovery Is Expected

And the reasons are based upon the way the leading omnichannel retailer of electrical products and services is recovering its trading poise.

That was clearly indicated in the middle of May when the group issued a Trading Update for the year to 27^th April 2024, giving the market a guidance that its full year adjusted pre-tax profits will be at least £10m higher than expected coming in the range of £115m-£120m.

The Update suggested that its end of year net cash position will be at some £95m, which compares to the current market value of £868m.

The Business Now

Following the disposal of its Greek interests in April the group is left operating online and through 720 stores in some 6 countries, being the market leader in all of its markets.

In the UK it also operates iD Mobile, its own mobile virtual network, which is a business many of the City whisperers suggest should be either sold off or floated as a separate entity, which could almost double the whole group’s value.

Analyst Comments

Berenberg notes that the group’s improving sales momentum, its expansion of market share and its presence within a significantly depressed, highly discretionary segment of domestic retail, makes it well placed to benefit from a near-term rebound in demand.

“Despite a record of building sales momentum and UK end-market dynamics that are well suited for demand recovery, Currys trades on a significant discount to peers. We expect this discount to diminish as trading momentum continues, indebtedness reduces further and growth accelerates.”

Over at Liberum Capital its analysts applaud the disposal of the Greek stores and its management’s attention to the other parts of its whole business.

Sector specialist Adam Tomlinson concludes that the current valuation remains far too cheap, giving no credit for any further earnings upside even as momentum now turns positive and ahead of macro signs improving.

Management Comment

At the time of its latest Trading Update, its third upgrade in the last year, CEO Alex Baldock stated that:

“Our performance is strengthening, with good momentum in the UK&I, and with the Nordics getting back on track.

Sales are now growing again, margins are benefiting from higher customer adoption of solutions and services, and cost discipline is good.

All this means improved profits and, with our strong cash position, we’re well set up for the year ahead.”

Between now and Thursday 27^th June, when the full year results are due to be published, market views infer that further price rises can be expected.

MicroSalt released its first full-year results as a London-listed company on Thursday and hailed a ‘transformational’ year in which it won contracts with some of the world’s largest food companies.

Given the full year results released today covered the period up until the end of 2023 – when the company was heavily engaged in R&D – there was little of note in terms of financials.

Since listing in London in February, MicroSalt has announced a string of commercial updates demonstrating expansion into new markets and growth in existing markets. We will learn about the financial impact of these developments in the coming reports.

Sales were fairly flat on the prior year in 2023, and, as one would for a company investing in R&D, losses grew slightly.

The big takeaways were the company’s upbeat outlook and insights into relationships with major customers. MicroSalt said key customers were integrating its low-sodium technology into its products, and 2024 would be a key year for orders from new and existing customers.

“This has been a transformational year for MicroSalt and with continued evidence of the timeliness and essential nature of its products as it emerged as a recognised and preferred choice for product reformulation globally,” said CEO Rick Guiney.

“Our geographic outreach is expanding all the time, now with inroads into Asia, Australia, South Africa, the UK, Germany, Canada and Latin America with a resultant boost to our sales pipeline. Furthermore, our consumer products including SaltMe crisps and MicroSalt shakers have successfully provided a low-sodium alternative for households worldwide, cementing our brand as an essential, generation-spanning choice. I am delighted that we can look ahead with the utmost confidence and in eager anticipation of further successes awaiting us”.

The FTSE 100 found a response to rising interest rate tensions and souring sentiment on Thursday as early losses were met with a bid for Uk stocks in early trade.

Markets had been almost euphoric at the beginning of May so the step down in sentiment was to be expected, yet it still doesn’t soften the blow for investors looking at a FTSE 100 that’s fast approaching the 8,000 mark.

We noted earlier in the week a raft of Federal Reserve speakers would be scrutinised for their comments on inflation and interest rates and the mood music hasn’t been favourable with bond yields rising.

“Treasury yields have risen to four-week highs, following relatively cautious comments from the Federal Reserve about the interest rate cutting cycle, which has dented market confidence,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

Concerns about US rates inevitably translate to concerns about UK interest rates, and the poor overnight session in the US played a part in the FTSE 100’s decline early on Thursday. 

Although the index started in the red, London’s leading index staged a midmorning rally and turned positive with the index trading at 8,197, up 0.17% at the time of writing.

With important US PCE data set for release later in the session, one would expect a choppy day for stocks as traders react to expectation of when the Federal Reserve will cut rates.

“European markets dug their heels in and tried to stop the declines that dominated yesterday’s headlines. The FTSE 100 was firm, the IBEX 35 nudged ahead 0.7% and the Dax dipped 0.2%. Stability is welcome, but pre-market indicative prices point to another bad day on Wall Street so the jury is still out whether today is going to end up being another difficult session for equities or not,” said Dan Coatsworth, investment analyst at AJ Bell.

Autotrader

Autotrader accelerated to the top of the FTSE 100 leaderboard on Thursday after posting upbeat full-year results in which revenue grew 12% despite a general slowdown in new car sales. The company has enjoyed a buoyant second-hand car market that sees second hand cars no selling faster than before the pandemic.

“It’s hard not to be impressed with Auto Trader’s rise since its 2015 IPO. The UK’s largest online automotive marketplace has been shifting through the gears, generating increasing returns for its shareholders while showing no sign of slowing down,” said Mark Crouch, analyst at investment platform eToro.

“Despite the onset of inflation in 2021, causing revenues to stall, the company has since stepped on the gas and revenues per user have rebounded to record highs in each of the following three years. It’s little surprise then that this morning’s full year earnings report is more of the same. Revenues, profits and cash flow have all moved higher.

“Auto Trader has made itself indispensable to buyers and sellers in recent years. With at least 80% of buyers using Auto Trader, this has resulted in franchise retailers, manufacturers and private sellers turning to Auto Trader as a matter of course.

Dr Martens share surged on Thursday as investors chose to look past dismal sales performance and focus on substantial cost cuts.

The group met already subdued guidance which would have pleased investors with low expectations for the full year results.

Although the CEO was fairly upbeat about the earnings report, sales performance would have made horrible reading for investors. Group sales were down 12% as North American sales dived 24% – a region the company says it wants to focus on in 2025.

“Our FY24 results were as expected and reflect continued weak USA consumer demand. This particularly impacted our USA wholesale business and offset our Group DTC performance, where pairs grew by 7%,” said Kenny Wilson, Chief Executive Officer, Dr Martens.

“We are clear that we need to drive demand in the USA to return to growth in FY26 onwards and are executing a detailed plan to achieve this, with refocused and increased USA marketing investment in the year ahead.”

With group sales falling double digits in percentage terms, Dr Martens needed to take a long hard look at their business to figure out how they were going to stop the erosion of the bottom line. 

The easy answer to this conundrum is almost always cost cuts and that’s what the company has decided to do. 

The company has highlighted ‘organisational efficiency’ and ‘operational streamlining’ as methods to reduce costs suggesting some staff members could be facing the boot. 

“The firm has announced a raft of cost cutting measures and it seems they do need to pull themselves up by the bootstraps to get out of this financial quagmire. The new CFO is targeting savings of £20-25 million, news of which is being well received by the market this morning. This morning’s bid however is a drop in the ocean, given that the shares have pretty much been on the decline since the IPO in 2021,” said Adam Vettese, analyst at investment platform eToro.

“Consumers have been under pressure in this higher inflation environment and with their punchy ticket price, a pair of Docs is probably one of the first luxuries to make way. The numbers would back this up.”