Tuesday’s Stock Market Report featuring Barclays, Intertek, Regus and Synairgen

The Markets

The UK construction industry has made a resurgent start to 2015 after activity hit a 17 month low in December, according to the latest PMI figures for the sector. The index rose by one point to 60.1 for the month. Confidence in February was higher and respondents said that there were currently good workloads. However, analysts believe that the industry will slow down later this year as councils cut maintenance funding and the housing market cools.

The Bank of England has highlighted 50 cases of potential market abuse as it works to change how it operates. Mark Carney, the Bank’s Governor, said that 42 incidences were referred to the Financial Conduct Authority and that the number passed on reflected new policies introduced following the recent foreign exchange manipulation controversies.

At the London close the Dow Jones had decreased by 131.88 points to 18,156.75 and the Nasdaq fell by 0.99 points to 4,438.78.

In London the FTSE 100 closed down by 51.51 points at 6,899.13 and the FTSE 250 dropped by 103.90 points to 17,146.02. The FTSE All-Share decreased by 25.87 points to 3,714.45 while the FTSE AIM Index shrank by 3.95 points to 710.13.

Broker Notes

Quality and safety solutions provider Intertek (ITRK) has been given a “hold” rating and 2,562p target price by Beaufort Securities after the firm published full year results yesterday that showed falling revenues at actual exchange rates but increased pre-tax profits of 300.2 million pounds. The broker sees particular potential in the firm’s product arms. The shares dropped by 49p to 2,513p.

Northland Capital said that Nostra Terra Oil & Gas Company (NTOG) ended the year well despite difficult market conditions and has assigned the exploration and production outfit a “buy” rating but cut its target price to 0.36p. The broker said that a solid and economical output base meant that 2015 could show mild revenue growth despite subdued drilling activity. The shares stayed flat at 0.16p.

Shore Capital reiterated its position that insurance and reinsurance outfit Jardine Lloyd Thomas (JLT) is worth a “buy”, with a target price of 951p, after it posted a strong set of full year results. Dividends have been increased by 6.3% to 28.9p and Shore said the current US strategy presented the possibility of significant organic growth. Shares in the company dropped by 22.5p to 929p.

Blue Chips.

Banking giant Barclays (BARC) increased adjusted profits before tax by 12% to 5.5 billion pounds for 2014 but made a significant provision of 1.25 billion pounds against potential penalties resulting from ongoing investigations in to allegations of improper behaviour on the foreign exchange market. The firm has aggressively cut costs, with a 5% reduction in headcount. Barclays shares dropped by 8.45p to 254.3p.

Housebuilder Taylor Wimpey (TW.) completed the sale of 12,454 homes during 2014, with average selling prices increasing by 11.5% to roughly 213,000 pounds. Operating margins increased by 430 basis points to 17.9% and profits before tax and exceptional items grew by 67.7% to 450.1 million pounds. The company is currently 51% sold for its 2015 targets. Shares in Taylor Wimpey rose by 3p to 147.9p.

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Mid Caps

Consumer transport outfit Stagecoach (SGC) said that overall performance and profitability during the last few months was in line with expectations, leading management to retain its current forecast for the year ending 30th April. London buses and UK rail services continue to be the key drivers of like-for-like revenue growth in the current year. The shares climbed by 2.5p to 340.1p.

Actuator and flow equipment manufacturer Rotork (ROR) earned revenues of 594.7 million pounds over the course of 2014, a 2.8% increase over the prior year as order intake reached record levels and sales to the power industry rose by 16%. Operating margins rose by 20 basis points to 26.4%. Management aim to grow further in 2015 via a renewed focus on international sales. The shares grew by 154p to 2,600p.

Serviced offices and outsourcing solutions provider Regus (RGU) saw profits before taxation for the 2014 year rise by 7% to 87.1 million pounds, despite the negative effects of adverse currency movements. Revenues grew by 9.3% to 1.67 billion pounds. Management announced that the dividend would be increased by 11% to 4p. Shares in Regus dropped by 19.7p to 221.8p.

Small Caps

Construction and engineering services firm ISG (ISG) recorded a loss before tax of 7.2 million pounds for the six months ended 31st December, down from 7.8 million pounds in the comparable period due to the effect of older contracts from the UK construction arm. The UK Fit Out and Retail divisions performed well, as did the international branches of the firm. No interim dividend will be paid. The shares fell by 68.5p to 170.5p.

Pharmaceutical research outfit Synairgen (SNG) posted a post tax profit of $1.2 million (0.78 million pounds) for 2014 after it received a $7.25 million (4.71 million pound) upfront payment from AstraZeneca for the global SNG001 licence. The deal has the potential to deliver future revenues of up to $225 million (146.2 million pounds) if development and commercial milestones are hit. The shares rose by 2p to 29.5p.

Industrial fuel cells manufacturer AFC Energy (AFC) earned revenues of 0.79 million pounds over the year ended 31st October as the firm entered new markets in South Korea and developed relationships with a number of significant firms. Net research and development expenses fell due to increased grant levels. Shares in AFC Energy declined by 0.7p to 8.5p.

Construction material firm Breedon Aggregates (BREE) increased its revenues by 20.1% to 269.7 million in 2014 as market conditions improved throughout the year and the company upped its output levels. More than 50 million pounds were invested in acquisitions and capital projects in the period to bolster a solid level of underlying organic growth. The shares grew by 0.125p to 48.5p.

Textiles and dry cleaning specialist Johnson Service Group (JSG) successful entry into the high volume hotel linen market helped it to increase revenues by 8.7% to 210.4 million pounds in 2014. Profits before taxation fell to 11.6 million pounds due to restructuring costs and a 4.9 million pound exceptional charge related to pension costs. Shares in the firm dropped by 2p to 74p.