Friday’s Stock Market report featuring NetDimensions, BP, JD Sports and Phorm

The Markets

The European Commission issued a preliminary finding that Amazon’s tax arrangements in Luxembourg most likely constitute state aid, saying that there was “no indication” that the arrangements were compatible with the common market. The firm uses a system of transfer pricing and royalties to shift profits between its companies. Luxembourg’s deal with Fiat, Ireland’s with Apple and the Netherlands’ with Starbucks are also under investigation.

US investment banking giant Goldman Sachs reported a 5% increase in profits to $8.5 billion (5.6 billion pounds) for 2014, despite a 7% drop in 4th quarter earnings relative to 2013, with revenues falling in each of the firm’s four core divisions. Bloomberg data suggests that Goldman’s trading profits were the lowest for any year since 2005 and Fixed Income, Currencies and Commodities earnings were 33% lower than last year.

At the London close the Dow Jones had increased by 49.13 points to 17,369.84 and the Nasdaq was up by 17.29 points at 4,106.93.

In London the FTSE 100 closed up by 51.49 points at 6,550.27 and the FTSE 250 climbed by 7.22 points to 15,922.51. The FTSE All-Share increased by 22.65 points to 3,520.23 while the FTSE AIM Index dropped by 1.82 points to 695.64.

Broker Notes

Panmure Gordon rated software company NetDimensions (NETD) as a “buy” with a target price of 178p following news that the firm’s results were likely to be significantly better than the previous year. The broker believes that the turnaround of the healthcare business and the company’s ongoing work to secure its projects in an increasingly safety conscious market are bull points. The shares ended the day flat at 82p.

Packaging manufacturer DS Smith (SMDS) has been downgraded to “hold” from “buy” by Berenberg Bank. The broker said that the company had demonstrated its ability to generate value in a highly competitive market, but that the stock’s recent gains and lack of movement in earnings expectations limit future upside. The shares dropped by 3.9p to 319.4p.

Shore Capital has reiterated its “buy” position and 340p target price on distribution and aviation services firm John Menzies (MNZS) after the company confirmed that trading in 2014 had been in line with expectations. The broker believes this will comfort investors who might have feared further weakness arising from problems at Heathrow, with Shore confident that these issues will not return in 2015. The shares rose by 11p to 351p.

Broker believes troubles departed from Menzies’ Heathrow Ops

Blue Chips.

Oil giant BP (BP) announced the US District Court for the Eastern District of Louisiana has found that the firm was not grossly negligent in relation to its source control efforts at Deepwater Horizon. However, the company will be subject to a penalty under the Clean Water Act for the 3.19 million barrels of oil that were discharged in to the Gulf of Mexico. The scale and type of penalty is yet to be determined. The shares grew by 21.55p.

Mixed day at court for BP

Mid Caps

Speciality chemicals firm Synthomer (SYNT) said that trading since its last management statement in October has been in line with expectations, with demand in November and December weaker than in 2013 due to an early start to the end year slowdown. Margins improved due to a drop in raw material prices and new product launches in Asia markets were successful. The shares rose by 0.4p to 240p.

Instrumentation and controls company Spectris (SGP) said that sales for the three months ended 31st December rose by 5%, contributing to a 2% increase in full year revenues. The growth was driven by strong performances in North America and Asia Pacific, outweighing a flat year in Europe. Adjusted operating profits for 2014 are believed to be in the region of 198 million pounds. The shares grew by 14.5p to 903.5p.

Sports and leisurewear retailer JD Sports Fashion (JD.) recorded like-for-like sales growth of 12% in its stores over the five weeks to 3rd January, despite strong comparatives from 2013. As a result, management believe that profits before taxation for the year will now exceed the top end of market expectations. Preliminary results will be published towards the end of April. JD Sports shares climbed by 31.9p to 508p.

JD in fashion as retail sales

Small Caps

Market research outfit Brainjuicer (BJU) reported that revenues rose by 1% over the course of 2014 to roughly 24.6 million pounds, despite the impact of adverse currency translation rates and difficult trading conditions in the UK. Demand for quantitative products grew strongly, but sales of lower margin qualitative services fell. Management expect pre-tax profits of around 4 million pounds for the year. The shares dropped by 2.5p to 379.5p.

Speciality chemicals and nanomaterials firm Graphene Nanochem (GRPH)) said that, while previously announced delays to the launch of the PlatDrill line mean that the firm will be loss making for 2014, it managed to trade profitably during the three months to 31st December. This would be the first quarter that the firm has made money and management hope to build on this growth in 2015. The shares rose by 0.25p to 41.25p.

Online education services provider Learning Technologies Group (LTG) said that its two acquisitions from 2014, LINE and Preloaded, have been successfully integrated into the group and that as a consequence of this results for the final quarter of the year will be ahead of expectations. The company has also received a significant number of new orders, including a major three year deal with the Ministry of Defence. The shares grew by 1.25p to 20.75p.

Internet personalisation technology firm Phorm (PHRM) almost quadrupled its peak daily usership in the second half of 2014 with more than 148 million people logging on the service. Total revenues for the six months rose to $1.05 million (0.69 million pounds), four times higher than in the same period of last year. Management expect growth to continue through 2015 and have allocated significant budgets to commercial campaigns for the start of the year. The shares rose by 0.375p to 11p.

Staffing and human capital management firm Impellam (IPEL) said that full year trading will be in-line with expectations, with a good UK performance offsetting an underperforming North American region. The integration of the firm’s two recent acquisitions are proceeding as planned and the company will announce its final dividend and preliminary results in early March. Impellam shares fell by 47.5p to 565p.

Investors letting Impellam go?