Talking AstraZeneca, Bytes, Computacenter, easyJet, Hays, Jet2, Playtech and Polar Cap Technology

The guys discuss this week's updates from AstraZeneca, Bytes, Computacentre, Hays, Jet2 and Playtech, plus Apollo's surprise bid for easyJet. 

Steve explains why everyone should read Polar Capital Technology's results for manager Ben Rogoff's insights, and the team look ahead to results next week from Burberry, Trustpilot and the US Banks, kicking off with JPMorgan Chase on Tuesday.

Transcript

SPEAKER_00 0:05

Hello everyone and welcome to this latest edition of the Sherzy Five podcast. Um, I'm here with my new colleagues, uh Ian Conway and James Crux, and it's uh nice to see him back. You know, he was he was he was vacant gap in his chair on Wednesday, as we mentioned. And what was happening with you?

SPEAKER_02 0:22

Uh yeah, well, apologies for absence. Uh, I think that's what they call it, isn't it? In the the meeting minutes. Apologies for absence. AIC summer reception, Steve, which was fab. It was at the Investec offices on Gresham Street. Lovely to see everyone. Baking hot, I have to say. Wasn't it, James? It was roasting hot.

SPEAKER_01 0:40

Toasty, yeah.

SPEAKER_02 0:40

But lovely to see everybody. Annabelle was there. Uh, Richard Shepherd Cross, our good friend from Custodian, was there. Emily Church, ACC Newgate was there. Everybody was on very, very good form. But um, I I I see it's been a week of um interesting ups and downs in terms of results and investor reactions. But generally, for you, I mean, the tech stocks have been positive, haven't they?

SPEAKER_00 1:00

Yeah, I mean, there's been a real kind of rally back um in the sort of tech space. We were saying on Wednesday about how it's been quite volatile over the last few weeks now, and I think investors are just just a bit cautious about um the fullness of valuations, and so we were explaining about look beyond the US. Um, but here in the UK, we had two uh IT resellers, the biggest on the market, Computer Centre, and also Bytes technology, which uh we flagged in last week's um look ahead piece. Um and they were both very, very strong results. Um Computer Centre in particular, it's it's a decade high, I think, uh the share price now. Um an incredible turnaround story.

SPEAKER_02 1:39

And that's a FTSE 100 stock, isn't it? If I'm not mistaken. Absolutely.

SPEAKER_00 1:43

And Bytes is a FTSE 250. I mean, it's it's no it's no small fry. Um, I think that ultimately the difference was Bytes was a bit more sombre in its in its outlook, um, but still a brilliant cash flow business, uh, a better dividend yield um if you're if you're liking that kind of thing. Uh Computer Sense though was is clearly seeing a very, very sharp uptick in its um in its demand curve. So I mean, but basically that space is in a very healthy position at the moment. And of course, we had greater uh wider kind of insight into the tech space in general today. I mean, uh, one of the great fund managers, in my view, um around today, Ben Rogoff of the Polar Capital Technology Trust, he always tip to listeners is if you want to know anything about the tech space and indeed the wider markets, go and read his commentary in their final results or even their interim results. He gives pages and pages and pages of really insightful data, loads and loads of really instructive stuff about what's going on at the coalface. So, really, to get a real grip on the tech space and the little nuances within the tech space, go and read his four-year results today. They are absolutely outstanding. Um, it's it's a year-to-day performer, it's up about 45%. Over the last year, it's the stock has doubled over 12 months. It's been an absolute brilliant compound for investors over a decade. And and hats off to Ben Rogoff. Um, he celebrated his 20th anniversary at leading the fund uh or the trust um this this week. So uh you know, well played to Ben Rogoff. It's it's a fantastic trust. It's it's in my personal account, so so disclaimer there, but really insightful. So definitely go and have a read if you've got the time. Loads of stuff to to to pull apart there.

SPEAKER_02 3:27

Yeah, I'm the old man, alright? Because both of you own that.

SPEAKER_01 3:31

I do as well, yeah. Yeah, I followed that. So yeah, I took my queue and it's it's worked out well. It has. Uh, but a busy week for your names as well, James. Yeah, well, I've sort of dipped into a few other sectors as well, but there have been some positive updates. So Hayes was one that surprised me. So guiding to the top end of the range. A lot of this is coming from cost cutting and sort of a decline in you know the rate of negative uh net fee income. So not getting too excited about it. And also the outlook's rather uncertain given the AI impact on jobs. So um yeah, that's one that I wouldn't get too uh too excited about. Also, online gambling platform PlayTech has raised its earning guidance. Um, and another one that is also quite surprising was Jet 2, which I know Steve covered on the web. So that delivered a strong finish to the year. It's quite an optimistic tone on summer trading. So going into the print, investors have been a bit worried about price competition, late bookings, and that type of thing. Um, Jet 2, they also highlighted uh resilient demand and a successful launch at Gatwick Airport. So those are the ones that have caught my eye.

SPEAKER_02 4:26

Oh, I was looking at uh Gleason today. Um they were all right, actually. The results are okay. Stock hasn't really done much though, and you do wonder you know what these things, what these companies have got to do really to uh to kind of reignite investor interest. Uh, we have Vistri earlier in the week, which uh I didn't comment on, not being there on Wednesday. No great surprise. Lowered guidance. I mean, it basically said we're gonna take a charge, took a charge for the first half, we're gonna take more charges in the second half, but we don't know how big they're gonna be. Uh market didn't like it. The big surprise this week was AstraZeneca. So, you know, one of the biggest stocks in the FTSE 100 came out with uh phase three trial results for one of its heart treatments called Wainua, and unfortunately, it didn't meet its end points, and the stock got absolutely clubbered. Uh, it was down more than 10% at one point. And if you think of the size of the company, that was over 30 billion pounds wiped off it. It ended down six percent, so this was yesterday, but it's down another couple of percent today. And I think the problem is you know, uh, Astra we're not just not used to a firm like AstraZeneca publishing negative trial results, phase three trial results, and you know, I think peak annual sales are estimated at something like five billion. So the reaction was way bigger than that. Um, but you know, five billion is a blockbuster, so quite a big disappointment for them, I'm afraid.

SPEAKER_00 5:53

It's it's a it's a it's a really interesting space, I find the drug discovery, because of course they're going through years. I mean, clinical trials are all about humans, so they've done lots of animal testing before they even get to clinical phases. Um, but of course, you've got to have a big pipeline. So when when one doesn't quite meet the criteria for the um the various regulators, um you've got the next one coming through very quickly. I suppose that's going to depend very much. That's going to be you know, it'll speed up sometimes, it'll be a fuller pipeline sometimes, and then it'll be a thinner pipeline sometimes, and maybe its pipeline is just a bit thinner at the moment. So maybe that's uh part of the reason why it's been been hit harder than you might expect.

SPEAKER_02 6:30

Yeah, I mean it's partner with a partner with a US firm called Ionis in in developing this drug. So that's one way you can do it. You can partner with people, you can buy people, leading on to MA because um this week we already had, didn't we? Beginning of the week, ITV selling its media and entertainment business to Sky, to Comcast. Um, today we had real surprise news: Apollo out of nowhere swooped in with a £7.15 offer for EasyJet and poor Castle Lake and made five offers, and the last one was kind of mmm okay from Easy Jet. Today, Apollo's just come in from left field, £7.15, 25p higher than the last Castle Lake bid. They haven't answered the question of what they're gonna do about ownership because, as a US firm, legally, they're not allowed to own a majority stake in a European airline. I'm guessing they've got something up their sleeve, they're gonna roll, yeah, reveal that maybe next week. But that got the market quite excited, and um it's interesting, isn't it?

SPEAKER_00 7:29

Because uh, I mean the the the management the the board effectively were were talking to uh to clear lake about you know you're you're really opportunistic. We're going for a bit of a uh a lean time at the moment, but this doesn't really reflect the the underlying value of the business, and Apollo seemed to really kind of get that. That the underlying value of the business is much fuller than Clearlake has winter cough up for.

SPEAKER_02 7:50

Yeah, I think the I think the other thing that's been going on behind the scenes is European airlines have been looking at EasyJet and thinking, you know what? It's got some nice delivery slots from Airbus, it's got an amazing roster of uh landing slots all across Europe, and actually they'd all be if any of those assets came up for sale, they'd be interested. All European airlines would be interested in having some of that. So I guess the question is is Apollo gen Apollo's making all the right noises, it's saying, you know, we thoroughly support the management, we support the strategy, look forward to working with the employees. No hint they're gonna break it up. Watch this space. I mean, for for owners of shareholders in EasyJet, we said, you know, every time Castellade came back with a bib, we said just remain in your seats uh and wait for announcements, you know, because you knew that wasn't the end of the story. And maybe this isn't the end of the story, maybe somebody else will come along. Um, what are we looking forward to next week, then, Steve?

SPEAKER_00 8:51

Well, and it's this uh it's getting quite full. So next week we've got a whole bunch of uh US only starting. The big banks are obviously starting to come out. Um you've looked at uh JP Morgan, um Chase, um, in our look ahead piece today. Um, you've got um Goldman Sachs, Bank of America, uh Citibank. I mean, there's a whole litany of of um banking companies gonna start um announcing results, and that's always the the the the the sound you know the starting pistol to the the to the US earnings season. Um we've got the AI trades being reflected in ASML, we'll have results that next week. Um and there's there's someone else as well. Um Seagate as well, which is slightly under the radar, um, very much in the um the AI space, and TSMC, uh TSMC as well will also be uh unveiling reporting results. And we've got loads of other stuff on the in the US uh Johnson Johnson, we've got Netflix and so on. Um and this there's a whole bunch of stuff in the UK as well. I've been looking at Trust Pilot, James. You've been looking at the luxury sector again. Uh who's that?

SPEAKER_01 9:51

Yeah, we've got Burberry Q1. So you know, investors will be looking to see if the turnaround's still making some progress. The sector backdrop is still difficult. It's another big week for Nick Train because he's stuck you know stuck with that stock through thick and thin, always champions the brand. So, you know, we'll watch this base.

SPEAKER_00 10:05

Yeah, interesting.

SPEAKER_02 10:06

And I think, haven't we also got? I know we've got um uh a pod with the fund manager lined up in a fortnight's time, but I think we've also got one with Bloomberg Intelligence luxury analyst, James. So that'll be interesting to get our teeth into.

SPEAKER_01 10:18

Definitely, we've got that one on the slate, so just looking to book in a time, but we're looking forward to that one. Yeah, definitely.

SPEAKER_00 10:22

Yeah, well, um, I think we'll uh we'll call it a day. Uh happy Friday to everyone. Go and enjoy the sunshine while it's here. Um, don't don't melt too much. Um, we'll look forward to seeing you next time we uh catch up, probably on Wednesday. Have a good weekend, and that's it from us. Take care. See you next time.

SPEAKER_02 10:40

Cheers.