Stock of the day 13/05/2015 – TalkTalk Telecom Group PLC/ Marston’s PLC

Thursday looks set to be a day of beer and broadband, as TalkTalk Telecom Group PLC and Marston’s PLC both reveal their latest figures before the bell.

There have been some big movements in the telecommunications industry of late, and signs are suggesting that TalkTalk Telecom Group PLC might want a slice of the action ahead of its full year preliminary results statement on Thursday. A flat 2014 saw the slimmest of downturns for TalkTalk, for £3.05 at the start of the year to £3.04 at its end. Things have been slightly healthy in the first few months of 2015, despite a quick dip to £3.01 in the first week of January. The post-election push felt across the markets led TalkTalk to an intraday high of £4.07, before falling to a current trading price of £3.60.


(Source: IT-Finance.com 13/05/2015)

TalkTalk is rumoured to be, alongside O2, in the mix for Tesco’s mobile business as the UK’s mobile sector gradually shrinks. TalkTalk would make sense as a buyer if Tesco was to sell its mobile service, despite the fact that Tesco Mobile actually operates using O2’s network. The supermarket giant has already offloaded its broadband, phone and video-on-demand services to the telecommunications company, and the purchase of its budget mobile line would help solidify TalkTalk’s ‘quad play’ capabilities. The company has already has cornered roughly 10% of the UK’s SIM-only mobile market, but with BT buying EE and Li Ka-Shing, the owner of Hutchison Whampoa and Three, purchasing Telefonica’s UK operations, i.e. O2, TalkTalk might be in the market for a bit more of the mobile pie.

Elsewhere, TalkTalk has increased the costs of its landline, TV and broadband packages, the worst being a 43% increase for its ‘Simply Broadband’ customers, as well as the removal of 0845 and 0870 numbers from its phone deals. Luckily, if you are being kind, that this news came on a UK Bank Holiday, and helped limit the losses TalkTalk felt after the news. The company has also had advertisements promising broadband with a ’99.9%’ reliability banned due to the ASA deeming them misleading.

With its third quarter 2015 earnings release back in February being the company’s strongest ever, seeing robust gains in broadband, mobile, fibre and TV customers, TalkTalk may become a victim of high expectations when it announces its latest figures on Thursday. This has led analysts to give TalkTalk a consensus rating of ‘hold’ with a target price of £3.17.

With premium ales the drink of the moment, Marston’s PLC is leading the charge ahead of its half year 2015 earnings release on Thursday morning. 2014 was hardly a year of note for the pub and brewery company, opening at £1.42 and closing at £1.42. However things have been slightly more robust since the New Year and after a £1.39 in the first week of 2015 Marston’s reached a high of £1.73 in the aftermath of the surprise UK election result. The company is currently trading at £1.64.


(Source: IT-Finance.com 13/05/2015)

Marston’s last significant set of results commented that the overall decline in the UK beer market saw somewhat of a turnaround in 2014, and the continuation of this trend will be key for the company’s first set of 2015 results. Special attention will be paid to Marston’s premium lagers and ales, the areas with the biggest rooms for growth, especially a focus on ‘off-trade’ in the latter.

Reports suggest that the off-trade premium bottled ale market could be worth £1 billion by 2020 after growing from £280 million to £490 million in the past 6 years, with premium bottled ale sales growing 75% in the last 5 years. The two big ales in regards to ‘first time buyers’ are Marston’s Hobgoblin and Greene King’s Old Speckled Hen, the former of which just edged the latter in terms of first time buyers’ preference.

A strong showing from Hobgoblin could be central to Marston’s overall bottled ale strategy, with the company’s successes in that specific beverage sector of extra interest to investors in the know, especially since Marston’s is the leading seller of total bottled ale sales at 16.5% compared to Greene King’s 14.5% of the 7.9 million sold in 2014.

There are a few factors in play in regards to Marston’s upcoming results. The company’s figures should receive a boost from strong Christmas and New Year’s sales, announced at the end of January, and it will be interesting to see the state of the company’s pubs progress, with Marston’s intending to open at least 8 new public houses in the first half of the year. Investors will also be keen to assess the initial outcome of the £25 million purchase of Thwaites’ brewing business back in March after beginning to brew the company’s beers last year. Numbers have been sparse on the ground ahead of Marston’s release, leading to a consensus rating of ‘hold’ with a target price of £1.58.