Insider: heavy buying after big falls at two FTSE 350 stocks

These FTSE 100 shares proved popular with ii customers and directors following a profit warning, while FTSE 250 cyber chiefs splashed out after a post-results slump.

16th December 2024 08:51

Graeme Evans from interactive investor

Ashtead boss Brendan Horgan and three directors of NCC have invested a combined £320,000 after seeing their shares fall sharply on the back of weaker trading guidance.

Horgan spent £213,000 with Ashtead Group (LSE:AHT) shares 14% lower on Tuesday’s profit warning, which the equipment hire firm blamed on activity in America’s local construction markets.

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NCC Group (LSE:NCC) chief executive Mike Maddison bought £25,000 of his company’s shares, while chair Chris Stone spent £60,000 and chief operating officer Kevin Brown £20,000 after the cybersecurity specialist fell 17% on guidance that sales cycles have lengthened.

The setbacks for Ashtead and FTSE 250-listed NCC derailed momentum after what’s been a year of strong share price progress for both companies.

Sunbelt Rentals owner Ashtead is now back where it started 2024 at near 5,330p, having previously rallied to December’s year-high of 6,400p.

While US mega-projects and disaster recovery work continue to support demand, cuts in US interest rates have not come quick enough to boost local construction spending.

This has reduced expectations for full-year rental revenue growth to 3%-5%, compared with the previous range of 5% to 8% for the year to April.

By flexing capital expenditure to these market conditions, cash flow guidance increased to $1.4 billion and will underpin a new share buyback of up to $1.5 billion over the next 18 months.

Horgan said the company remains in a position of strength, given its ability to capitalise on structural growth opportunities and to enhance returns to shareholders.

He recently launched the Sunbelt 4.0 strategy, which set out a path to North American revenues of $14 billion compared with $10 billion in the 2024 financial year.

Almost all the group's operating profit comes from the region, prompting last week’s boardroom decision that Wall Street is the natural long-term listing venue for the group.

Having floated in 1986, the group intends to retain a secondary listing in London once the US switch takes place over the next 12-18 months.

The shares proved popular with interactive investor customers after last week’s warning, while analysts at Goldman Sachs have valued them at 6,660p and RBC Capital Markets at 6,750p. Horgan bought his shares on Thursday at a price of 5,320p.

The purchases by the top team at NCC took place at between 134p and 140p, which compared with more than 160p prior to Wednesday’s results for the 16 months to 30 September.

The former National Computing Centre business rose 40% between April and early October but has since been hampered by a lengthening of sales cycles in line with the rest of the industry.

This has particularly impacted the Cyber division, which provides services that help firms to identify and respond to IT security risks. NCC’s other division is Escode, which protects businesses from unforeseen disruptions and ensures their software applications and source code are safe and always available.

Maddison, who joined the company in 2022, reiterated that NCC expects to grow in the current financial year and that he remains confident in delivering medium-term financial goals.

He added that an “ever-increasing” threat landscape, technology such as artificial intelligence (AI) and a rise in regulation created multiple growth drivers for both Escode and the Cyber business.

Peel Hunt, which has a price target of 200p, said management deserved credit for structural improvements that should help NCC navigate to better profits by the 2026 financial year. Shore Capital reiterated a Buy stance and fair value estimate of 190p.

Boardroom buying at blue chip

Croda International (LSE:CRDA) chair Danuta Gray has disclosed an investment of £40,000 after the FTSE 100-listed speciality chemicals company traded at its lowest level in over seven years.

Her purchase took place on Tuesday at a price of 3,486p, which is close to 2024’s low point following another year as one of the weakest stocks in the blue-chip index.

The East Yorkshire-based group is down by about 30%, having fallen 23% in 2023 due to a combination of lower sales volumes and customer de-stocking.

Its most recent trading update in November offered encouragement after sales growth of 5%, aided by momentum in Fragrances and Flavours within the Consumer Care division.

Chief executive Steve Foots also highlighted improved sales trends for Croda’s agriculture businesses within the Life Sciences operation.

He added: “While we are benefiting from more stable customer inventories and demand in key markets and geographies, the overall trading environment remains challenging.

“We continue to focus on strengthening the group through delivering our strategy combined with tight cost control and capital discipline.”

UBS reckons the shares deserve to be trading at 5100p, with its forecast for 2025 showing a profits recovery of 17% to about £302 million.

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