Our FTSE 100 reshuffle predictions

Our investment research analyst Helal Miah, makes his predictions on possible movers in next week’s FTSE reshuffle.

Article updated: 6 March 2017 12:00pm Author: Helal Miah

FTSE resuffle

Intu

In the second reshuffle of 2017, it appears highly likely that large shopping centre investor Intu Properties will be the latest candidate to fall victim and consequently drop out of the FTSE 100. The Real Estate Investment Trust (REIT) has, like many of its peers, seen its shares underperform in recent months due to concerns about the impact of Brexit on the UK economy and retail sales. The group did beat market expectations with its full year results in February and said it was confident of achieving an increase in net rental income in 2017 despite what is likely to be a challenging business environment. Nevertheless, the consensus forecasts for earnings and dividend growth are uninspiring.

Hikma Pharmaceuticals

The smallest pharmaceutical company in the FTSE 100, Hikma Pharmaceuticals is, as it stands, also in the running for demotion. Shares have been dropping off in the group of late after it emerged that the company was unlikely to receive US regulatory approval for a generic drug for asthma this year, with further data submissions needed before approval. Combine this with the impact of the recent devaluation of the Egyptian pound and the high scrutiny its management are under for failing to carry out proper due diligence for the acquisition of West Ward Columbus, it is unsurprising to see the group in this predicament.

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Royal Mail

Royal Mail also finds itself in the high risk zone for relegation. Despite recently posting full year results which pleased the markets, in which group revenue and profits before tax were up, its heavily reliant on the international parcels business as letter volumes continue to act as a drag on overall performance. It rubber stamps the ethos that the uncertainty amongst UK businesses in the current Brexit environment means less are using direct mail marketing.

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G4S

When it comes to prospective new entrants it seems that the world's leading security solutions group G4S is in pole position for promotion. G4S is the largest employer quoted on the London Stock Exchange and has operations in over 110 countries. The share price has staged a significant recovery of late on the back of reassuring results and the market warming to managements restructuring as it addresses past problems. This strategic review will keep management busy for some time yet and investors will have acknowledge that it will provide potential for the company to improve efficiency, cut costs, sell off and close further businesses or assets and restore faith in the group.

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Segro

Snapping at its heels is warehouse and industrial properties developer Segro. The group, whose customers are in the UK and Continental Europe, focuses on edge of town flexible business spaces. The increasing interest for online shopping means the demand for warehouse space is needed now more than ever, and this is likely to be the reason for its success of late.

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All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

Helal has spent time as an independent proprietary trader, trading the US equity futures market. He has also helped manage private client, institutional, retail and hedge funds. His qualifications include the Securities Institute Diploma and the Investment Management Certificate.