The announcement regarding the next FTSE 100 and 250 promotions and relegations is looming.
So Hargreaves Lansdown has analysed the contenders and compiled a runners and riders list of which firms look to be the likely movers when the announcement is made next week.
The biggest news is that online takeaway firm Just Eat clearly hasn't bitten off more than it can chew, since it is lined up for a promotion to the FTSE 100. Nicholas Hyett, equity analyst at Hargreaves Lansdown, said:
Reshuffles in and out of the FTSE 100 are somewhat symbolic, but can highlight companies whose stars are in the ascendancy, Just Eat being a good example having only floated a little over three years ago.
Noting that local fast food outlets are rarely tech experts, Hyett says Just Eat plugs the gap, offering takeaway owners a platform to sell their food online. A series of deals have helped solidify its position across markets globally, and last week Just Eat's takeover of Hungryhouse was green lit by the competition watchdog.
|Contenders for promotion to the FTSE 100||Contenders for relegation to the FTSE 250|
|1. Just Eat||1. Merlin Entertainments|
|2. DS Smith||2. Babcock|
|3. Halma||3. Mediclinic International|
The indices are reviewed on a quarterly basis, and set according to share prices from the close of business on the Tuesday before the first Friday of the review month.
Also lined up for the big time is corrugated paper packaging provider DS Smith. Hyett said the firm's focus on "innovative, complex packaging has made it a long-term winner", while environmental tech group Halma is also due for a promotion, with dividend growth stretching back decades and a proven ability to generate an "exceptionally high return" on capital employed.
As for the bad news, Merlin Entertainments' rollercoaster ride is set for a pretty steep drop – down to the FTSE 250, according to Hargreaves Lansdown.
Third quarter results covering the crucial summer season were worse than expectations, but there is hope. Hargreaves Lansdown said the group has a portfolio of "fundamentally attractive assets and brands" that it thinks remains attractive to the public in the long-term.
Babcock is also a relegation contender, as the market is looking at problems with other large contractors and "budget black holes in defence spending, and sees Babcock as not immune".
Finally, Mediclinic could also be set for the drop, after walking away from acquiring more of Spire earlier this week. Hargreaves Lansdown said its biggest problem was that a large chunk of its business is in South Africa with a credit rating that is "rapidly heading south".
It noted that Mediclinic's share price has halved since August last year, hence why it's staring at the FTSE 100 trap door.
|Contenders for promotion to the FTSE 250||Contenders for relegation to the FTSE 350|
|Rhi Magnesita N V||P2P Global Investments|
|Bca Marketplace||Vectura Group|
|Ti Fluid Systems||Restaurant Group|
|Pantheon International||Electra Private Equity|