Wednesday’s Stock Market Report featuring Barclays, United Utilities, Card Factory and TyraTech

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The Markets

US food titans Heinz and Kraft will merge after 3G and Warren Buffett acquired the latter firm in a $40 billion (£26.8 billion) deal. Heinz was previously bought by the pair and taken private in 2013. Some analysts have questioned the estimated $1.5 billion in annual cost savings that have been promised, but investors liked the deal, with Kraft shares up by $20.87 at $82.20 at the London close.

At the London close the Dow Jones had decreased by 198.52 points to 17,812.62 and the Nasdaq fell by 1.45 points to 4,366.85.

In London the FTSE 100 closed down by 16.88 points at 7,002.80 and the FTSE 250 dropped by 62.76 points to 17,516.48. The FTSE All-Share had decreased by 9.57 points to 3,779.33 while the FTSE AIM Index shrank by 4.08 points to 717.52.

Broker Notes

Shore Capital has maintained its “buy” rating and 420p target price on Hilton Food Group (HFG) despite group sales falling by 2.3% in 2014 due to difficult foreign exchange conditions and competitive pricing environments. Earning before interest and taxes marginally beat forecasts and the broker believes that recent capital expenditure on production facilities will bear fruit in 2015. The shares grew by 8p to 428p.

Hydrocarbon explorer Bowleven (BLVN) has kept its “buy” rating from Westhouse Securities after posting an $81 million (£54.3 million) loss for the six months to 31st December that was largely due to a $76 million (£51 million) impairment to reflect revised commodity price and planning assumptions for its Etinde development. The broker says that the firm has sufficient cash to cover its obligations in the foreseeable future with upside potential as drilling work continues. The shares fell by 2.5p to 29.5p.

Financial giant Barclays (BARC) has been downgraded to a “hold” by Investec, who wrote that, “the main plank of our investment case for buying Barclays over the past year has been its extreme relative and absolute cheapness, reinforced by an absolute cost reduction story and the material foreign exchange tailwind in evidence in the third and fourth quarter 2014 results, which, we believe, is likely to continue in 2015”. The shares dropped by 6.55p to 251.9p.

Blue Chips

Water supplier United Utilities (UU.) has said that trading for the year ending 31st March has been in line with market expectations and that significant operational improvements have been made throughout the business. Net debt is expected to increase due to additional capital expenditure measures taken this year. Full results for the period will be released in late May. The shares rose by 1.5p to 958p.

Consumer travel operator TUI AG (TUI) performed in line with expectations through the winter season, with its mainstream packages almost fully sold and recording higher average prices than in previous years. Bookings for the summer appear strong and have seen a substantial increase in online interest relative to 2014. Financial details for the half year will be published in May. The shares climbed by 31p to 1,212p.

Mid Caps

Revenues at housebuilder Bellway (BWY) rose by 18.7% to £831.2 million for the half year ended 31st January as completions rose by 15.7% to 3,754 and prices continued to rise in key markets including London. The company is looking to expand in to the Bristol region in the coming months and its order book stood at £1.12 billion on the 8th of March. The shares grew by 55p to 2,059p.

Construction and infrastructure specialist Balfour Beatty (BBY) wrote off another £118 million in 2014 to better represent the risks in its building arm. Overall pre-tax losses at the company were £304 million. Management have elected not to reinstate a final dividend, but promised a near-term improvement in cash generation and profitability. Balfour Beatty shares climbed by 12.8p to 244p.

High street chain Card Factory (CARD) increased revenues by 8.1% to £353.3 million during the year ended 31st January as it opened 51 additional stores over the course of the year. Like-for-like sales were up by 1.8% which also helped contribute to higher statutory profits before taxation of £42.7 million. Chief Executive Officer Richard Hayes said the firm was in an excellent position and that he was confident in its prospects. The shares dropped by 13.9p to 284.1p.

Small Caps

Pharmaceutical research outfit Futura Medica (FUM) raised £12 million in new funding during 2014 and successfully brought its CSD500 range to market in Belgium and the Netherlands. An increased net loss of £3 million was recorded and the firm held cash reserves of £9.49 million on 31st December. Management said that a number of projects to make 2015 a more successful year were underway. The shares fell by 0.75p to 40.5p.

Spread betting and CFD specialist London Capital Group (LCG) earned adjusted profits before taxation of £1.1 million in the year ended 31st December, roughly half those recorded during 2013, but on a statutory basis the business lost £7.9 million before taxation on its continuing activities as trading volumes and new client acquisition both fell substantially. The shares grew by 2.375p to 23.875p.

Pest control products developer TyraTech (TYR) has secured a deal to list its Vamousse products in the US pharmacy chain CVS. The retailer has over 7,600 branches across the country and serves over 100 million customers a year. TyraTech also said that UK Tesco branches would begin to sell Vamousse from open shelving after previously offering it a pharmacy counters. The shares were up by 0.5p at 6.5p.

Minerals explorer Jubilee Platinum (JLP) saw improved performance at its Middelburg operations in six months ended 31st December, leading to a 22% improvement in revenues. The group’s pre-tax loss narrowed to £1 million from £1.5 million, aided by further reductions in the firm’s cost base. Management is continuing to investigate new prospects. The shares rose by 0.125p to 1.35p.

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