Tuesday’s Stock Market Report featuring Stellar Diamonds, Wolseley, GAME Digital and Quixant

The Markets

UK CPI inflation fell to 0% for the first time in February, falling from from 0.3% in January, and exceeded analysts’ consensus forecasts. The falls came as the supermarket price battles wage on and fuel prices continue to decline. Bank of England Chief Economist Andy Haldane said last week that falling inflation could necessitate a further cut in interest rates, a suggestion that Mark Carney has publicly rebuffed.

At the London close the Dow Jones had decreased by 36.77 points to 18,079.27 and the Nasdaq fell by 6.70 points to 4,452.25.

In London the FTSE 100 closed down by 17.99 points at 7,019.68 but the FTSE 250 rose by 28.01 points to 17,579.24. The FTSE All-Share decreased by 6.71 points to 3,788.90 while the FTSE AIM Index grew by 5.43 points to 721.60.

Broker Notes

Beaufort Securities has posted a “buy” rating on Pennon Group (PNN) after the environmental utility infrastructure company issued a pre-close trading statement indicating that performance has been in line with market expectations. The broker believes that this has cleared up concerns that the 2014/15 water pricing freeze would negatively impact earnings and upgraded its view accordingly. The shares dropped by 4.5p to 845p.

Oil and gas explorer Faroe Petroleum (FPM) has had its “buy” rating reiterated by Westhouse Securities after 2014 results showed total production towards the high end of estimates, but earnings were negative due impairments and exploration costs. The broker remains positive on the outlook for 2015, given the company’s solid cash position. The shares grew by 2.25p to 79.25p.

Stellar Diamonds (STEL) has been rated as a “buy” by Daniel Stewart after the company reported its first diamond sales. The 4,412 carat package was sold for $0.41 million (£0.28 million) in Antwerp with the single largest stone weighing in at 5 carats. The firm is working on a trial mining facility in Guinea and continuing to carry out exploration activity in Sierra Leone. The shares declined by 0.05p to 0.9p.

Blue Chips

Building and plumbing materials firm Wolseley (WOS) recorded revenues of £6.4 billion for the six months ended 31st January, a 8.9% increase over the comparable period of the previous financial year. Trading margins in ongoing business arms rose 20 basis points to 6.1% due to an especially strong performance in North America, but profits before tax were hit by a significant impairment on the future profits in the Nordic region. The shares fell by 112p to 4,098p.

Mid Caps

Soft drinks manufacturer A.G. Barr (BAG) increased turnover by 2.7% to £260.9 million over the year ended 25th January despite the loss of the Orangina brand. Management have proposed a final dividend of 9.01p, bringing the total dividend for the year to 12.12p and 10% above the prior year. The firm said that market conditions would remain challenging in 2015. Shares in the company dropped by 37p to 640p.

Private hospital operator Spire Healthcare Group (SPI) recorded a seventh successive year of growth in 2014 with revenues rising by 12% to £856 million. Net debt was cut sharply from £1.5 billion to £424.3 million at 31st December. Management expect the positive trends to continue though the current year and are working to expand capacity in key sectors. The shares fell by 25p to 365p.

Electronics retailer GAME Digital (GAME) saw revenues decline slightly in the 26 weeks to 24th January relative to the same period of the prior year and profits before taxation dropped by 1.8% to £33.2 million. The firm expanded its market share in Spain to 36% following the acquisition of 44 stores and digital revenues rose by 40% year on year. GAME shares declined by 15p to 245p.

Small Caps

Profits before taxation at stock broker Panmure Gordon (PMR) increased by 84% to £2.15 million during 2014 despite turbulent market conditions in the second half of the year. The firm paid its first dividends since the onset of the financial crisis, with the board recommending a final payment of 2.5p per share for the year. Management expect 2015 to proceed well. The shares lost 8p and closed at 127.5p.

Consumer marketing outfit NAHL Group (NAH) saw revenues from continuing operations rise by 10.4% to £43.8 million in 2014. Operating profit margins were 400 basis points higher than in the prior year at 29% with enquiry rates up by 15.3%. Management are considering a number of additional acquisitions in the current period following the purchase of Fitzalan Partners. The shares grew by 5p to 275p.

Big data and analytics software specialist Fusionex International (FXI) has won a major contract for Smart Government Initiative in Asia where it will provide assistance in the analysis of immigration and border control information. Financial details of the deal have not been released, but the firm described it as a multi-year arrangement that will open doors in the region. The shares rose by 20p to 375p.

Oil and gas wellhead equipment firm Plexus Holdings (POS) recorded a 7% increase in sales revenues for the six months ended 31st December, earning £13.5 million as demand for its high pressure/high tension technologies remained strong. After the close of the period Plexus has received a number of significant orders from its geographically diverse client base. The shares climbed by 6.125p to 196.125p.

Casino gambling software specialist Quixant (QXT) increased revenues by 32% to $31.9 million (£21.4 million) in 2014 as it attracted a number of new customers at the high and low ends of the market. Profits before tax exceeded $7 million (£4.71 million). The firm believes that M&A activity in the industry opens the door further for its business offerings in 2015. The shares rose by 1p to 149.5p.