Raspberry Pi sweetens London IPO market in piping hot debut

 
Sam North, analyst at investment platform eToro, says: “Shares of UK budget computer firm Raspberry Pi surged by up to 40% on Tuesday morning following its initial public offering (IPO), building up excitement for full open trade beginning this Friday. The IPO was priced at 280 pence per share, with shares soaring to 390 pence on the first day, indicating robust investor interest.

“The listing, while small in stature, is a major boost for London’s IPO market, which has been struggling with only 23 companies coming to market last year. Founded in 2012, Raspberry Pi is renowned for its affordable, single-board computers, initially popular with hobbyists but now significantly used in industrial applications. In 2023, the company reported revenues of $265.8 million and a gross profit of $66 million.

“The strong market reaction to Raspberry Pi’s IPO highlights investor confidence in the company’s growth potential in the industrial and embedded computing sectors. Whether or not the IPO marks the beginning of a revitalisation for the London stock market remains to be seen, but current sentiment is a vote of confidence in local tech firms. As always, retail investors should take caution before investing as volatility can be high around the IPO date.

“Eben Upton, CEO of Raspberry Pi, emphasised the positive interactions during the IPO marketing process and the solid support from sophisticated London investors. Significant investments from Arm and Lansdowne Partners, along with backing from Sony, underline the company’s strong industry connections. The funds raised will be allocated to engineering projects, supply chain improvements, and other corporate purposes, supporting the company’s ongoing expansion and technological development.”

 

UK GDP two steps forward and one back

 

Ben Laidler, Global Markets Strategist at eToro says: “The UK economic recovery suffered a temporary setback with April posting 0% month-on-month growth, the lowest in four months, as manufacturing headwinds offset the resilience of services.

“This stalling in the tentative economic recovery will only help further make the case for the Bank of England to follow the ECB in cutting interest rates over the summer, with inflation nearing 2% and unemployment rising.

“This lukewarm growth will fan the political debate ahead of the July election, but the economy remains on a gradual recovery path, with unemployment still near generational lows and real wages rising as inflation has fallen.”

 

Oracle pushes higher despite earnings miss

 

Mark Crouch, analyst at investment platform eToro, says: “With every successive push to a new record high for the Nasdaq and S&P 500 indices, the more questions arise about how well-justified these lofty prices are when compared to the underlying earnings. Some might describe it as a halo effect currently surrounding AI, others might call it over-exuberance.

“Subscribers to the notion of frothiness in current valuations might point to Oracle’s surge – climbing more than 10% in post-market trading – despite reporting revenue and earnings that fell short of market expectations.

“The technology bellwether did, however, announce an expansion of its tie-up with Microsoft Azure, which will support OpenAI and ChatGPT, and the forward guidance was bullish. CEO Safra Catz said she expects AI demand to push revenue into double-digit growth this fiscal year, while Chairman Larry Ellison said the multicloud partnership with Microsoft will “turbocharge” growth, adding that the Oracle database will be available within the Google cloud later this year.

“It will be interesting to see whether a similarly positive sentiment will carry through to semiconductor and infrastructure software giant Broadcom, which reports after the close on Wall Street. Its shares have soared more than 35% so far this year, driven by optimism regarding AI’s potential to drive sales. Revenue of $12 bn is expected for Q2, which would represent 37% growth over the past year.”

 

Crest Nicholson profit warning amid challenging housing market

 

Adam Vettese, analyst at investment platform eToro, says: “Investors may no longer be riding the crest of a wave this morning after the housebuilder issued a profit warning and slashed its forecast by a third. The shares had been up over 30% since the end of April but with this morning’s update also including a dividend cut, the outlook will have notably differed.”

“Inflation has been the bane of the housebuilding sector for sometime and although easing up, there is still significant pressure on the firm to keep costs under control. There is also the added uncertainty of the upcoming general election next month and what implications this could have for the firm and builders in general. Homebuyers may also be seeing the mortgage market and holding off for a rate cut before making a commitment. Crest Nicholson will hope that these factors are alleviated and the firm can get back on track in H2.”

 

Fuller’s sales on the up as firm eyes super summer

 

Mark Crouch, analyst at investment platform eToro, says: “Fuller’s earnings suggest the British pub group is gaining momentum on their road to recovery. Inflationary pressure is still causing a headache in this industry, leading to unavoidable price hikes to defend already watered down profit margins. The good news however is that some of those pressures, specifically in food and energy, have begun to relent.

“Price hikes have not deterred punters though, as strong demand and lower costs mean Fuller’s have reported a marginally better than expected annual profit. In more good news for investors, the company’s share buyback scheme is being stepped up with the purchase of an additional two and half million shares.

“London is a key market for Fuller’s and according to current data, tourist numbers are on the rise and set to reach pre-pandemic levels within the next couple of years. Couple this with a steady pick-up in more of us returning to the office and the signs are positive for Fuller’s.

“A hot summer, should we be so lucky, will speed up the recovery and the company will of course have one eye on the European championships kicking off later this week, which promises to bring pub goers out in force. With England tipped to go deep into the competition, a healthy boost in profits could be coming home for Fuller’s.”

 



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