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Micro Focus and AstraZeneca keep FTSE firing

Micro Focus and AstraZeneca keep FTSE firing

Software firm Micro Focus (MCRO) and pharmaceutical giant AstraZeneca (AZN) have buoyed the FTSE 100, driving the index to fresh four-month highs on forecast-beating results.

The UK blue-chip index rose 23 points, or 0.3%, to 7,214, with Micro Focus leading the way, up 13.3% at £17.20 after a smaller than expect fall in full-year revenues.

 

Micro Focus had struggled to integrate £7 billion worth of assets it bought from rival Hewlett Packard (HPQ.N) in 2017, leading to the departure of its chief executive and a profit warning that sent its shares crashing last year.

‘Today’s full year results show some signs it can regain its credibility with investors in this regard as both cash flow, debt and revenue come in better than expected, the dividend is hiked and its share buyback scheme is extended,’ said AJ Bell investment director Russ Mould.

A key backer of Micro Focus is the Crux UK Special Situations fund, which launched in September and is managed by Richard Penny, who holds 3.9% of his portfolio in the shares. It is also a top 10 holding in the Premier Ethical, Legal & General UK Alpha and Neptune Income funds.

AstraZeneca shares meanwhile rose 4% to £59.54 after reporting fourth quarter revenues up 5% year-on-year at $5.8 billion.

The pharmaceutical giant forecast a second straight year of sales growth amid a continued recovery from the loss of major patents.

Growth come from its cancer treatments, with oncology drug sales rising 61% to $1.8 billion year-on-year. Its treatments Imfinzi and Lynparza look to compete with Merck & Co’s (MRK.N) main cancer drug Keytruda. China was another source of growth for AstraZeneca, with sales increasing 22% to $948 million at the end of 2018.

‘The much promised turnaround is showing momentum after years struggling to fend of generic competitors to AstraZeneca’s blockbusters drugs,’ said Helal Miah, investment research analyst The Share Centre.

Expansion into emerging markets was paying off, with sales up 12% in the final quarter, said Miah, as he maintained his ‘buy’ recommendation on the stock.  

‘Overall this is an encouraging set of results and closely reflects that of their peer GlaxoSmithKline (GSK), both of whom are successfully meeting the challenges of generic competition finally with investments in research and development and expansion into faster growing areas of the world for healthcare needs.’

Fund manager Jeremy Hewlett is among the highest conviction backers of AstraZeneca, with a 7% position in his Mirabaud UK Equity High Alpha fund.

Convatec (CTEC) was the heaviest 'mid-cap' faller, down 18.6% to 120.8p as the medical device maker reported a 6$ slump in 2018 earnings.

Restaurant Group (RTN) was another big FTSE 250 faller, down 13.3% to 126.6p, as chief executive Andrew McCue stepped down due to ‘extenuating personal circumstances’.

This comes shortly after the Frankie & Benny’s pizza chain owner bought noodle restaurant Wagamama in October.

Brexit uncertainty also weighed on the pound, which dipped further against the euro and the dollar, down to $1.281 against the US currency.

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