Financial Trading Blog
Stock of the day 29/09/2015 – Saga Group PLC
Can the stock regain its highs with its half-year earnings release on Wednesday?
After opening the year at £1.52 Saga had an impressive January; the £26.26 million acquisition of motorbike insurer Bennetts was a big boon to the stock, expanding the company’s customer-based and attracting investors alike, sending it to a high of £1.92 by the end of the month.
(Source: IT-Finance.com 29/09/2015)
The sale of a 10% stake in the company to 2 investors then raised £200 million at the end of February, but did cause the stock to dip away from the £1.80 to £1.90 trading bracket Saga had been in since the Bennetts deal. However, after remaining just below £1.80 for the majority of March, a strong April, a month that saw Saga report a 9.6% increase in its full year like-for-like pre-tax profits to £195 million (although with a total loss of £133.8 million due to the purchase of Destinology last August), saw the stock enter May at £1.95.
The market-boosting Tory win gave Saga an extra nudge in the right direction, and an increased share sale in the middle of May, due to high demand and the promise of its dividend since the company was listed in 2014, announced at Saga’s end of June AGM, put the stock on track to hit a 2015 high of £2.24 at the start of July.
However, since then Saga has begun to look a bit tired, with the price-eroding chaos taking its toll on the stock and, after flirting with dipping below the £2 mark at points across the end of August and the start of September, is sitting at a current trading price of £2.03 (IT-Finance.com, 29/09/2015).
Analysts are expecting Saga to further lay out their new strategy on Wednesday, including the potential for more cruise ship purchases, with investors keen to see if the company has any more acquisitions up its sleeve.
Saga Group has a consensus rating of ‘Hold’ with an average target price of £2.11.
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