Clarkson Upgrade Raises Shares 9%, FTSE 100 Lower
A major profit improvement by shipbroker Clarkson today raised hopes that global trade is performing better than expected.
Investors tend to keep a close eye on Clarkson, even if they don’t own any stock, because 85% of world trade is transported by sea.
The FTSE 250-listed company, which has been around since 1852, brokers deals for the huge tankers that carry raw or dry cargo or iron ore or grain.
An unscheduled update today revealed that trading for 2022 is well ahead of the company’s previous expectations, with the brokerage performing particularly well.
First half profits are expected to be at least £42m, up more than 50% from the record set the previous year when rising freight rates and volumes reflected a post-pandemic trade recovery.
Shares of Clarkson are up 9% or 280p to 3235p today, having recently fallen to their lowest level in more than a year as investors increasingly anticipated a global recession.
Liberum analyst Gerald Khoo raised his 2022 profit forecast by 17% and raised his price target by 100p to 4750p after the update.
He highlighted the strength of Clarkson’s business model, market leadership and global presence, adding that signs of a long-awaited rebalancing of supply and demand were now beginning to appear in most shipping segments.
Clarkson’s performance outperformed a largely resilient performance of the UK-focused FTSE 250 index, which took advantage of today’s stronger-than-expected GDP figure to outperform the FTSE 100.
Other big risers in the second tier included Trainline and fast-fashion business ASOS, with gains of 5% and 3% respectively. The FTSE 250 index fell 0.4% or 74.28 points to 18,780.68, while the top flight lost more than 1% or 76.67 points to 7133.19.
The biggest blue chip decliners came from the financial sector after falling more than 2% for Abrdn and Prudential, while BP shares were 1% lower after last night’s sharp drop in Brent price to $100 a barrel.
Retail-focused stocks were in demand after the surprise GDP figure of 0.5% in May, led by Next and JD Sports Fashion by more than 1%.