Thursday’s Stock Market report featuring Experian, Tullow Oil, Bovis Homes and Bonmarche

The Markets

The Swiss National Bank has stopped maintaining the Franc’s peg against the Euro and has also reduced interest rates by 50 basis points to -0.75%. Following the news, the Euro dropped dramatically, bottoming out at 0.80 against the Franc before seeing a partial recovery. The decisions had not been expected in many quarters, but Thomas Jordan, Chairman of the SNB, said that while the capped rate had been appropriate in 2011 circumstances had changed and the negative interest rate would discourage large investors from holding significant deposits in Swiss Francs. Jordan also said that the decision to remove the peg had been considered extensively, but the SNB had to “surprise markets” with the policy shift.

Swiss exporters, particularly luxury goods manufacturers, fell heavily on the development, while gold rose by $24 to $1,259 as investors fled to safety. The Euro also fell against the dollar as the SNB abandoned its position as a major buyer of the currency.

At the London close the Dow Jones had decreased by 42.42 points to 17,384.67 and the Nasdaq fell by 25.76 points to 4,119.95.

In London the FTSE 100 closed up by 110.32 points at 6,498.78 and the FTSE 250 rose by 43.20 points to 15,915.29. The FTSE All-Share had increased by 50.07 points to 3,497.58 while the FTSE AIM Index dropped by 0.65 points to 696.75.

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Broker Notes

Westhouse Securities has reiterated its “neutral” position on Petroceltic International (PCI) and 223p target price after the firm revealed that 2014 production had exceeded previous guidance. Over 90% of the firm’s output is gas which is sold at fixed prices in Egypt and has not been affected by recent oil price movements. However, the broker remains wary of current activist shareholders’ attempts to make major board changes. Petroceltic shares grew by 1.75p to 118.75p.

Data services specialist Experian (EXPN) has kept its “buy” rating and 1,065p target price from Shore Capital despite recording flat organic revenues and a steep decline in customer services income. There was some positive news in the American and UK credit arms, but the broker expects that the firm will face a few negative quarters before returning to growth in mid-2015. The shares rose by 56p to 1,121p.

Non-standard credit provider Provident Financial (PFG) was rated as a “buy” by Beaufort Securities after it announced that results for 2014 will be in line with market expectations. Vanquish Bank added 430,000 customers over the year, bringing its total to 1.3 million, and demand for the company’s online loan services rose. Beaufort believes that the company can continue to grow in 2015. The shares dropped by 54p to 2,470p.

Broker believes Provident prudent purchase

Blue Chips

Grocery distributor and high street retailer Associated British Foods (ABF) increased revenues for the 16 weeks ended 3rd January by 1%, despite the negative impact of foreign exchange movements. Sales at the company’s Primark chain were 15% higher than in the comparable period of 2015 at constant exchange rates, with the improvement driven by new store openings with branches in France proving very successful. Falling sugar prices harmed revenues in that segment of the business. The shares grew by 112p to 3,147p.

Exploration and development outfit Tullow Oil (TLW) has written off $2.3 billion (1.5 billion pounds) from the value of its exploration projects and other assets to reflect the reduction in global oil prices. The firm expects to report revenues of around $2.2 billion (1.45 billion pounds) for 2014, with gross profits of around $0.6 billion (0.4 million pounds). The shares fell by 3p to 354.9p.

Tullow Oil asset values evaporate

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Mid Caps

Management of DIY and general goods chain operator Home Retail Group (HOME) said that they are pleased with overall performance through the 18 weeks ended 3rd January and were particularly positive with regards to “Black Friday” promotions at Argos that drew significant increases in custom over all channels. Overall sales grew by 0.8% at Argos in the period. However, Homebase continued to struggle as margins dropped by 100 basis points and sales declined by 2.7%. Home Retail expects group benchmark profit before tax for the current FY15 financial year to be in line with the current market consensus. The shares declined by 12.9p to 199.1p.

Housebuilder Bovis Homes (BVS) recorded a 29% increase in legal completions over 2014 as it sold 3,635 properties at an average price of 216,000 pounds. Operating margins rose by 210 basis points to 17%. Management said that the trading outlook for 2015 is positive, with 1,752 units forward sold and management expect further volume growth for the year. Net cash stood at 5 million pounds at the period end and the firm said it will pay a final dividend of 23p per share for the year. Bovis shares fell by 50p to 769.5p.

Food wholesaler Booker Group (BOK) saw sales for the 16 weeks to 2nd January 2015 rise by 1.4%, despite continued revenue declines in Makro stores as the business exited non-profitable, non-professional product categories. The company’s profit and net cash forecasts have been maintained and its Indian expansion is developing well. Booker Group shares fell by 6.9p to 155.7p.

Is Booker a wholesale success?

Small Caps

Media and broadcast services provider Avesco Group (AVS) turned an operating profit of 0.9 million pounds over the year ended 30th September, a substantial turnaround from last year’s loss of 8.4 million pounds, driven by reduced losses at its Asia Pacific subsidiary and a shift to profit in its broadcast hire division. The overall loss before tax for the year was 0.43 million pounds, but management say that the first quarter has been positive and expect further recovery in 2015. The shares grew by 1.5p to 118.5p.

Womenswear retailer Bonmarche (BON) increased sales by 9.1% over the 13 weeks ended 27th December as online revenues rose by 34.9% and the company traded from an additional 18 stores relative to the same period of 2013. Management said that there had been pressure on margins and that sales had suffered due to warm weather at the beginning of the period, but overall performance was positive and results would meet expected levels. The shares rose by 7p to 308.5p.

Testing services provider SQS Software Quality Systems (SQS) expects results for 2014 to be in line with expectations, with revenues of around €268 million (207.1 million pounds). Earnings per share are likely to exceed forecast levels as profits have been in a more tax favourable geographic spread than had been planned. Management said that the firm was in a strong position for the coming year. The shares dropped by 5p to 567.5p.

Oilfield services and equipment supplier Enteq Upstream (NTQ) has said that it is seeing reduced orders and indicative budgets from its customers in North America following the recent decline in oil prices. As a result, revenues for the year ending 31st March are now expected to be below prior guidance and the levels achieved on the prior year. Enteq is implementing cost cutting measures to stabilise profitability. The shares fell by 4p to 14.25p.

Potash development company Sirius Minerals (SXX) has withdrawn its current application for planning permission for harbour facilities at Teesside for the York Potash project. The firm plans to resubmit a refined application in the near future and will publish a further update when this is accepted. Management believe that this does not affect the overall timescale for development. The shares sank by 0.5p to 8.5p.

Quarrying and finishing outfit Fox Marble (FOX) has agreed terms to supply 900 square metres of Argento Grigio stone to a subsidiary of Berkeley Homes for an undisclosed price. The marble will be used in 50 Chelsea apartments and is expected to be delivered in February. Management said that the deal spoke to the quality of Fox’s stone and hoped to build a long term relationship with Berkeley. The shares ended the day flat at 18.25p.

Fox says big order agreed