Thursday’s Stock Market report featuring Oxford Instruments, Diageo, Rank Group and Ideagen

The Markets

The UK retail sector beat sales forecasts in January, according to figures from the Confederation of British Industry’s latest distributive trades survey, which found that 50% of shops reported increased activity during the month. The organisation suggested that falling oil prices and low inflation meant consumers’ money was going further and it believes growth will continue in February.

Chinese internet retail giant Alibaba, which held the largest IPO of all time in September last year, saw its shares drop by 7% after the firm failed to meet sales targets. While sales rose by 40% to $4.22 billion in the last quarter, profits fell by 28%, largely due to non-recurring financing costs, despite margin improvements and revenue growth. The firm has an 80% share of the Chinese e-Commerce market.

At the London close the Dow Jones had increased by 40.07 points to 17,231.44 and the Nasdaq rise by 13.31 points to 4,127.06.

In London the FTSE 100 closed down by 15.34 points at 6,810.60 and the FTSE 250 fell by 66.71 points to 16,359.02. The FTSE All-Share decreased by 9.46 points to 3,650.26 while the FTSE AIM Index fell by 3.90 points to 686.56.

ADVERTISEMENT

Broker Notes

N+1 Singer reiterated its “buy” rating on medical instruments and reagents outfit EKF Diagnostics (EKF), with a 12 month target price of 26p. This came after the company’s trading update for 2014 indicated slightly better than expected revenues of 40.1 million pounds. However, the broker had cut its forecasts for the company earlier in the year and results were well short of those levels. The shares dropped by 2p to 20p.

High technology tools and systems specialist Oxford Instruments (OXIG) has been downgraded from “buy” to “hold” by Investec, which also cut its target price for the company’s shares to 815p. The broker said that “the group still requires a resumption of growth in demand to lift revenues and margins, but patience and nerve will be needed as net debt approaches covenant limits before falling again from September 2015”. Oxford Instruments shares fell by 14.5p to 765.5p.

Broker not so clever on Oxford Instruments

Blue Chips.

Global drinks producer Diageo (DGE) saw sales volumes for the six months to 31st December decline by 1.9% despite an improvement in the second half of the period. Premium reserve brands performed well, with revenues for the product category up by 10%. This supported a shift in the firm’s product mix that meant turnover declined by only 0.1% despite the drop in volumes and adverse currency impacts. The shares grew by 60.5p to 2,022.5p.

Investment fund 3i Infrastructure (3IN) made net divestments of 17 million over the three months ended 31st December. The firm invested 275 million pounds in private equity projects during the half year with major positions taken in a US precision rubber and silicone moulding firm and an international jewellery retailer headquartered in Germany. The firm paid an interim dividend of 6p earlier this week. Shares in 3i Infrastructure fell by 1p to 154.4p.

Infrastructure firm building value

ADVERTISEMENT

Mid Caps

Metrology firm Renishaw (RSW) posted record profits and revenues for the six months ended 31st December, with sales up by 36% relative to the same period of 2013. Profits before tax rose by more than 100% to 56.6 million pounds despite a significant impact from foreign exchange translations. Management believe that the company’s prospects for 2015 are highly positive. The shares declined by 38p to 2,303p.

Housebuilder Galliford Try (GFRD) has won four new major contracts in the extra care and affordable housing sectors worth a combined 72 million pounds. The largest deal is for a 36 million pound, 260 apartment retirement community around five miles south-west of Birmingham. The remaining three deals contain over 200 beds’ worth of accommodation. The shares rose by 12p to 1,312p.

Gaming and betting firm Rank Group (RNK) earned revenues of 361.7 million pounds in the six months ended 31st December, a 3% increase over the equivalent period in the prior year Adjusted profits before tax rose by a more pronounced 29% to 35.8 million pounds due to the strong performance of Mecca bingo venues and the reduction in bingo taxes. Rank shares grew by 12.1p to 178p.

Gaming firm moving up the ranks?

Small Caps

Information management software provider Ideagen (IDEA) grew revenues for the half year to 31st October by 53% to 5.65 million pounds as organic growth of 10% was boosted by the acquisition and integration of EIBS. The firm won its largest NHS contract to date during the period, a 1 million pound deal with Doncaster and Bassetlaw Trust, and also posted good results in the nuclear sector. The shares climbed by 0.75p to 39p.

Cloud-based video software developer Forbidden Technologies (FBT) has attempted to shift its marketing and sales strategies over the last two months with the goal of widening its focus and reducing costs. Management say that significant investment in upgrading its Forscene product during 2014 have raised interest in the software and the firm is switching to a licence-based model. The shares rose by 0.25p to 9.13p.

Digital procurement solutions firm EU Supply (EUSP) expects to report revenues of around 2.5 million pounds for 2014, approximately 41% higher than for the prior year due to a consistent sales pipeline delivering small and medium sized contracts. The pre-tax loss for the year will narrow to around 2.1 million pounds from 2.6 million in 2013. Full results will be released in April. EU Supply shares grew by 0.25p to 17p.

Architecture and interior design specialist Aukett Swanke Group (AUK) earned revenues of 17.3 million pounds in the year to September, a rise of 106% relative to the prior year despite continued underperformance in the company’s Russian operations. Profits before taxation almost tripled from 0.55 million pounds to 1.4 million and the firm is confident that it can continue to grow strongly through 2015. The shares rose by 0.75p to 7.625p.

Has architect drawn blueprint for success?