AA doubles in value – it is now worth £400m more than a few weeks ago
Breakdown firm AA has doubled in value in a matter of weeks after its shares made further gains this morning.
The company's stock rose over seven per cent after topping the London's stock market leaderboard yesterday. AA has added £400m to its stock market valuation since its shares sank to an all-time low at the start of March.
Barclays analysts issued a positive update on the firm this morning, increasing its target price.
After riding a rocky nine months, which has seen the firm demoted from London's mid-cap FTSE 250 index, AA was given a crucial boost by a leading credit ratings agency on Friday. S&P refrained from downgrading the breakdown firm, which is sat on a £2.8bn debt pile.
Yesterday, the AA revealed in-line annual results with execs admitting it had received a number of unsolicited approaches from private investors.
Chief executive Simon Breakwell said: "I think Martin [Clarke – CFO] and I have had several meetings with businesses that come and talk to us.
We had those meetings but Martin and I are very, very clear were about building this company, executing the strategy and delivering value for our shareholders.
Read more: The AA has broken down. Can its new boss get the company back on track?
Two big sell-offs
Markets have shrugged off a public legal battle with former boss Bob MacKenzie, who it was revealed yesterday is seeking £225m in damages from AA. MacKenzie was sensationally sacked last summer, prompting the first of two big sell-offs of AA stock.
The second share dive came in February as markets shuddered in reaction to turnaround plan and cancelled dividend.
“In the two months since we set this [the restructuring plan] out, we are if anything, more confident," Breakwell said yesterday.
AA shares remain heavily shorted, with more than six per cent of the firm's stock on loan to hedge funds betting against its fortunes. This, however, has fallen by half since the end of February, according to IHS Markit figures.
Today, Barclays analysts called forecasts in relation the AA's growth opportunities as "conservative".
In a note entitled "Now it's all about execution", Barclays wrote:
Management say that 2019 has started well and, we believe, were able to speak about the new strategy more positively and in more detail than a few months ago; this leads us to think that it is gathering support internally – a factor crucial to its success.
Read more: AA criticised for "cavalier" refusal to provide for £225m legal damages
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