A GB Group revenue guidance cut dominated Friday’s session on the London Stock Exchange, sending the Chester-based identity verification and fraud prevention company’s shares crashing to a new 52-week low, even as the broader FTSE 100 closed only modestly lower on a mixed day for European markets.
The FTSE 100 ended the session down 22.56 points, 0.2%, at 10,750.11. That capped an underwhelming week for the blue-chip index, which fell 1.4% over the five trading days. The FTSE 250 fared better, closing up 29.71 points, 0.1%, at 24,867.42, and the AIM All-Share edged up to 800.92.
GB Group revenue guidance cut rocks investors
The sharpest move of the day belonged to GB Group. Its shares sank 31% by the close, but the selling had begun earlier: according to Morningstar, the stock fell 27% to 169p in morning trading and at one point set a new 52-week low of 167.20p.
The company lowered its revenue growth guidance for the financial year ending 31 March 2027, now expecting growth of between 1% and 3%, down from a previous outlook of mid-single-digit percentage growth. GB Group cited tough trading conditions in its Americas Identity arm and the departure of its sales leader in that region.
Despite the guidance reduction, management said it still expects an adjusted operating profit margin of approximately 21%, supported by cost control, while pressing ahead with a previously announced £6 million investment in its GBG Go platform, according to Joshua Thompson.
Shore Capital analyst Alasdair Young described the announcement as “disappointing given management reported Q1 trading in line with expectations three weeks ago.” He added that it was “another setback to the reacceleration narrative and raises legitimate questions over whether competitive pressures in Americas Identity are greater than previously appreciated.”
Week’s wider picture: mining and pharma weigh on FTSE 100
Beyond GB Group, it was weak mining and pharmaceutical stocks that dragged the FTSE 100 lower. Antofagasta fell 4.6% (its second sharp drop in as many days) after Thursday’s lowered production guidance. GSK and AstraZeneca both shed 2.1%.
Aviva offered some relief to blue-chip investors. The insurer rose 1.8% after reporting strong first-half results, with operating profit reaching £1.33 billion in the six months to 30 June, beating the Visible Alpha consensus of £1.25 billion. RBC Capital Markets analyst Ben Cohen said the profit beat was driven by the UK and Ireland General Insurance business, which came in 6% ahead of consensus, calling the overall results “a small positive.” Entain also gained 2.1% as investors warmed further to Thursday’s better-than-expected revenue figures from the Ladbrokes owner.
On the FTSE 250, recruiters Michael Page and Hays continued a recent revival, rising 5.5% and 5.3% respectively. UBS upgraded Michael Page to “buy” from “neutral” and lifted its share price target to 235p from 180p, noting that even after a 43% rally from April lows the stock had still lagged sector peers, sitting 14% lower year-to-date versus peers up 17% on average. “We now think this underperformance is undeserved,” UBS said, putting an upside scenario of 500p per share on the stock.
On AIM, Cohort climbed 6.1% after being awarded a 140.7 million euro contract from Saab to deliver integrated sonar systems for the Polish Orka submarine programme. The Reading-based defence technology business said work will start immediately, with deliveries continuing out to the mid-2030s.
David Morrison, senior analyst at Trade Nation, said it looks as if momentum in London is picking up to the downside. “These pullbacks mark a pause in a sustained summer rally that had pushed European indices to record highs,” he said. “Much may depend on what happens to US indices. This week’s softer US inflation readings, along with last week’s disappointing payroll release, has led to a dialling back of Fed rate hike expectations.”
That picture was reinforced on Friday by US retail data. Advance monthly retail and food services sales fell 0.6% month-on-month in July to $763.6 billion, against an FXStreet-cited consensus forecast of 0.1% growth. Ksenia Bushmeneva, economist at TD Economics, suggested consumer spending in the US is transitioning from a weather and tax-refund-driven rebound in the second quarter to a more moderate pace in the third. The CME FedWatch tool placed a 69% probability that the Federal Reserve will leave rates on hold at its September meeting, up from 56% a week earlier.
Sterling rose to 1.3550 US dollars on Friday afternoon from 1.3498 dollars at Thursday’s equities close. GB Group’s next scheduled trading update will cover progress in its Americas Identity arm, where investors will be watching closely to see whether the 1% to 3% revenue growth target holds.
