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FTSE 250 movers: Spirent soars; not so Moneysupermarket

(Sharecast News) - FTSE 250 (MCX) 19,175.12 -0.13% Spirent Communications said in an update on Tuesday that, despite facing a challenging year in the telecommunications sector, its 2023 full-year results aligned with its revised expectations.

The FTSE 250 company said revenue for the year closed at $474m, down from $607m in 2022.

It said it anticipated delivering an adjusted operating profit in line with market consensus.

To adapt to the challenging market dynamics in the telecommunications sector, Spirent said it was accelerating its focus on non-telecom segments, which were currently showing more positive trends.

They had seen promising growth in order intake for their Positioning business and from Hyperscalers.

Additionally, the company secured a significant deal with a world-leading financial services organisation, opening up a new end market for them.

Spirent said it was taking proactive steps to optimise its cost base while preserving its technology leadership.

It said it had implemented several key initiatives, including a merger of its high-speed ethernet business with lifecycle service assurance and a reduction in headcount by approximately 8%, all without compromising essential research and development product roadmaps.

Furthermore, the company said it was reducing its office footprint to reflect the changing post-Covid-19 working environment.

Those initiatives, expected to incur an exceptional restructuring cost of $15m, had already generated cost savings in 2023 and were projected to yield significant savings in 2024, which would offset cost inflation.

The expected payback period for the changes was less than two years.

In terms of its financial position, Spirent maintained a robust balance sheet with a cash position of $103m, supported by efficient working capital management.

It repurchased $72m worth of shares during the year, demonstrating disciplined investment practices.

Looking ahead, Spirent said it was optimistic about the new financial year, starting with a growing order book.

It said it was well-positioned to make strategic and operational progress, with growth opportunities in non-telecom end customer markets.

While continuing to invest in leading technology solutions across its portfolio, the company said it was ready to capitalise on market recoveries when they occurred.

"We are making good progress diversifying and expanding our customer base whilst our telco end market key customers are managing their own challenges driven by the macroeconomic environment," said chief executive officer Eric Updyke.

"Whilst we cannot predict the duration of the current market challenges, we remain confident in our mid-term targets with the long-term structural growth drivers for our business continuing to be compelling, including the evolution of global 5G infrastructure and further development of ORAN, leveraging our market-leading solutions."

Updyke also said growth in next-generation cloud and AI data centre needs for Hyperscalers would gather pace, driving growth for the firm's 400G and 800G high-speed Ethernet test solutions.

There was also a heightened need for automated testing and assurance to help our customers benefit from both performance and cost efficacy.

"Demand for highly accurate location-based solutions for growing defence, aerospace and automotive applications," Eric Updyke added.

Berenberg said on Tuesday that it sold just over 5.17m shares in Trustpilot on behalf of shareholder Northzone in a placing.

The shares, which represent 1.23% of the issued share capital, were sold at 157p each. Following completion of the placing, Northzone will not have anymore shares in the review website.

The placing was conducted through an accelerated bookbuild, with Berenberg the sole bookrunner.

Trustpilot will not receive any proceeds from the placing.

Jefferies downgraded Moneysupermarket on Tuesday to 'hold' from 'buy' and slashed the price target to 265p from 305p.

"We see no near-term catalysts, and relative valuation metrics point to fair value," it said.

The bank said it expects growth in insurance, which makes up about 50% of revenue, to decelerate in 4Q23 and throughout FY24 as the group laps tough comps and car insurance premium disinflation takes hold.

"We agree with the 'Retain and Grow' strategy, but we believe it warrants a wait-and-see approach," Jefferies said.

It said the loyalty programme - 'SuperSaveClub' - and better use of firstparty data via the integrated 'Dialogue' platform should increase consumer stickiness and gradually decrease customer acquisition costs (CAC).

This should pave the way for revenue growth via increased cross-selling and margin expansion via lower CAC, it said.

"However, we are aware that it is still early days; we lack the proof necessary for full confidence in the success of the strategy, especially considering the industry's long-run structural issues, namely low growth and high competition."

FTSE 250 - Risers

Spirent Communications (SPT) 126.20p 8.98% Harbour Energy (HBR) 315.20p 6.27% QinetiQ Group (QQ.) 335.20p 5.34% Ferrexpo (FXPO) 74.40p 4.06% Foresight Group Holdings Limited NPV (FSG) 422.00p 3.94% Bytes Technology Group (BYIT) 608.00p 2.88% Diversified Energy Company (DEC) 1,028.00p 2.80% Baltic Classifieds Group (BCG) 228.50p 2.47% Sequoia Economic Infrastructure Income Fund Limited (SEQI) 84.20p 2.18% Bakkavor Group (BAKK) 93.80p 2.18%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 247.00p -8.04% Trustpilot Group (TRST) 158.90p -3.81% TUI AG Reg Shs (DI) (TUI) 531.00p -3.72% Helios Towers (HTWS) 87.85p -3.46% Travis Perkins (TPK) 751.00p -2.97% Hochschild Mining (HOC) 89.95p -2.76% Auction Technology Group (ATG) 454.50p -2.68% Crest Nicholson Holdings (CRST) 209.20p -2.61% Currys (CURY) 46.12p -2.54% TI Fluid Systems (TIFS) 140.20p -2.23%

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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