Thursday’s Stock Market Report featuring easyJet, Betfair, Aviva and Nichols

The Markets

UK house prices fell by 0.3% in February according to the latest figures from the Halifax. This was the first fall since October last year and takes the average house price to 192,372 pounds. Nevertheless, prices in the three months to February were 8.3% higher than a year ago. The figures came alongside news that the Bank of England has decided to maintain the base rate of interest at 0.5%. Rates have now been at their record low for six years.

Elsewhere, the Chinese government has set its GDP growth target at 7% for 2015, down from last year’s narrowly missed target of 7.5%. While the figure may seem high by developed economy standards, 7% would represent the lowest rate of Chinese growth in over two decades, down from 7.4% last year. Premier Li Keqiang also said that the government is targetting inflation of 3%, down from 3.5% last year but well ahead of the 0.8% price rises recorded by the country in January.

At the London close the Dow Jones had risen by 51.30 points to 18,148.20 and the Nasdaq was up by 8.35 points at 4,453.71.

In London the FTSE 100 closed up by 41.90 points at 6,961.14 and the FTSE 250 rose by 174.66 points to 17,310.31. The FTSE All-Share was up by 24.70 points at 3,752.00 while the FTSE AIM Index grew by 1.92 points to 714.2.

Blue Chips.

Budget airline easyJet (EZJ) saw passenger numbers rise by 6.1% to 4,491,425 in the month of February, with load factors rising by 0.2 percentage points to 90.9%. For the 12 months to February easyJet carried 65.6 million punters, up by 6.5%. Broker Numis set a “buy” stance and target price of 2,100p on the shares at the end of January. easyJet finished the day down by 16p at 1,722p.

Temporary power products supplier Aggreko (AGK) posted flat revenues of 1.58 billion pounds for 2014 but adverse currency movements took reported pre-tax profits down by 13% to 289 million pounds. In reaction the shares fell by 11p to 1,625p. The firm saw strong growth in the Americas during the year and a good performance in EMEA but flagged that trading conditions remain challenging in the Asia Pacific region. Operational highlights included the company successfully working on the Glasgow Commonwealth Games and FIFA World Cup in Brazil, which delivered combined revenue of 19 million pounds. Aggreko increased its total dividend for the year by 3% to 27.12p per share.

Shares in Aviva (AV.) surged by 37.5p to 569.5p after the firm annual announced results that were ahead of market expectations. The insurer grew operating profits by 6% to 2.17 billion pounds in 2014 on the back of new business up by 15% to 1 billion. Profits at the pre-tax level soared by 91% to 1.68 billion pounds, prompting the company to increase the final dividend by 30% to 12.25p per share, Elsewhere, fellow insurer Friends Life (FLG), which is shortly set to merge with Aviva in a 5.6 billion deal, saw its shares grow by 28.7p to 434.9p after reporting operating profits up by 38% at 556 million pounds for 2014.

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Mid Caps

Having a good day were investors in Spirax-Sarco Engineering (SPX), the shares powering ahead by 327p to 3,407p. This came on the back of the steam system management firm announcing it will return 91 million pounds to investors via a 120p per share special dividend. Results for 2014 were relatively flat, with adjusted operating profits up by 1% at 153 million pounds. However, management have decided on the special payment given the firm’s significant cash generating ability. Spirax also revealed that it will commence direct selling into the Indian market after exiting its current joint venture in the country with Forbes Marshall, expected before the end of the month.

Final results from mobile satellite communications business Inmarsat (ISAT) reported revenues relatively flat at $1.29 billion for 2014 but net profits up more than threefold at $341.1 million, driven by lower operating costs, lower tax and lower impairment losses. The firm increased the final dividend by 5% to 30.26 cents per share. Inmarsat flagged that the trading environment in 2015 is expected to be similar to 2014, with continuing underlying revenue growth in the Maritime, Enterprise and Aviation businesses and some continued weakness in Government, particularly in the US. The share price rose by 9.5p to 886p.

Online betting exchange Betfair (BET) reported that revenues grew by 20% to 114.6 million pounds in the three months to January. As a result the company upped its full year EBITDA forecast by around 15% to between 113-118 million pounds. In reaction the shares rocketed by 319p to 2,105p. Betfair commented that the increased profits have been delivered despite the recent introduction of a point of consumption based gaming duty, which had a 7 million pound impact in the quarter. The firm added that it expects record levels of political betting around the upcoming UK General Election and will increase its promotional activity around the upcoming Cheltenham festival. SBM believes that Bradford City currently look good value at 13/8 on Betfair to beat Reading in this weekend’s FA Cup quarter final. Pair that up with Arsenal to beat a beleaguered West Ham next week at 1/2.

Small Caps

Shares in troubled peat supplier William Sinclair (SNCL) plunged by 11.5p to 37p after announcing that CEO Peter Rush has left the business and that recent trading has been poor. On an interim basis Rush is being replaced by Stuart Burgin, a food industry specialist and a member of the mysteriously titled Institute for Turnaround. In terms of trading Sinclair said it has seen a slow start to the season, with sales to retail and professional customers below last year. Along with margin pressure in both sectors, results for the year on an underlying basis are expected to be materially worse than last year – not good given that last year’s underlying EBITDA loss was 0.85 million pounds. Stuart Burgin will now head up a transformation programme looking at returning the group to sustained profitability.

In a trading update Avesco (AVS), the provider of services to the corporate presentation, entertainment and broadcast markets said that trading in the first few months of the financial year has continued the positive trends seen during last year. The outlook for the summer period is said to be promising, with results for the year to September expected to be comfortably ahead of previous forecasts. Avesco shares moved up by 9.5p to 131p.

Vertu Motors (VTU) also announced a trading update. The vehicle retailer reported that results for the year to February would be in line with expectations for record revenues and profits. Driving the numbers were total vehicle sales volumes up by 14.3% and like-for-like used vehicle volumes up by 6.4%. Vertu added that the key March trading period – when registration plates change – could be a record month for total UK new vehicle registrations, with its own like-for-like vehicle order book currently running ahead of the prior year. Despite the positive update Vertu shares fell by 4.75p to 56.25p. Broker Liberum has a 110p target.

Vimto maker Nichols (NICL) had a strong 2014, outperforming the wider soft drinks market and posting a 3.5% rise in sales to 109.2 million pounds. However, a rise in operating margins drove a more pronounced 14.1% rise in pre-tax profits to 25.7 million pounds. The year saw sales rise by 3.3% in the UK market, outperforming the soft drinks market growth of 0.4%. Growth was stronger in the international markets, with increasing demand for Vimto concentrate helping to move sales up by 4.3% overseas. Nichols said it was well placed to continue last year’s trends into 2015 and increased the full year dividend by 14.2% to 22.4p per share.