FTSE reshuffle: Newcomers Dr Martens and Moonpig battle for promotion
The FTSE 100 is set for another reshuffle next week as the blue-chip index adapts to the pandemic and makes way for a handful of newcomers.
FTSE Russell, which runs the index, will decide who’s up and who’s down according to closing prices on 2 March, with changes effective from 19 March.
Despite the pandemic IPO activity in London has been busy, with a group of plucky companies now battling it out for promotion.
Dr Martens
Dr Martens is set to be the new kid to the FTSE 250 block and could even make its way into the FTSE 100.
The bootmaker is now valued at £4bn following its IPO, a big win for its private equity owner Permira which bought the company for £300m in 2014.
The company sells more than 11m pairs of shoes annually in more than 60 countries, and enjoyed revenues o £672m in the year ending 31 March 2020.
Moonpig
Moonpig has seen shares soar on its market debut and it is now all but certain to make it into the FTSE 250.
The online greeting card platform listed this month and said it expects to double revenues this year. In a recent update Moonpig said it expects revenue for the year ending 31 April 2021 is expected to be double the £173m posted in the previous year.
But Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, warns the initial success may come crashing down.
“When pandemic restrictions ease and consumers are free to browse real, rather than virtual racks of cards once more, its flying sales risk coming down to earth with a bit of a bump,” she said. “Plenty of other retailers are sniffing out the truffles in the e-card market with Card Factory, Funky Pigeon and start up Papier eager to steal more market share.”
Pennon Group
Pennon Group is set to lose its place in the blue-chip index at current prices, given it is ranked 122nd by market capitalisation, below the 110th which spells relegation.
Its share price has dropped 16 per cent over the last six months having suffered from a reduction in corporate water usage.
Pennon can no longer rely on income from Viridor after the £4bn disposal and the dividend represents payment from South West Water alone. It is likely to trickle into the FTSE 250.
TUI
Vaccine optimism and the Prime Minister’s recent roadmap out of lockdown could see travel company TUI return to the FTSE 100.
The company was relegated from the index last March as the pandemic took hold but its share price has since risen by 123 per cent. “Its potential return one year later would be a neat encapsulation of the difficulties and opportunities the pandemic has provided for travel stocks,” Richard Hunter, head of markets at Interactive Investor said.
Among others battling for a place in the FTSE are Royal Mail, engineer Weir Group and Bytes Technology Group, which made its debut in December.