Wednesday’s Stock Market report featuring Tesco, Sky, Victrex and Conviviality Retail
The Markets
In a new paper issued by the think tank this morning, the Institute for Fiscal Studies has estimated that a further 51 billion pounds of spending cuts will be necessary for the next UK government to meet targets announced during the last Autumn Statement. The report was optimistic about the prospects for growth in the coming years, predicting an annualised rate of 3% for 2015 and no inflation. Andrew Goodwin from Oxford Economics said that on the whole “the prognosis for the UK economy is pretty upbeat”.
Tensions continue to surround Greece’s new government as key figures tour Europe to seek support for changes to bailout plans. Analysts, including those at the Adam Smith Institute, have spoken out in favour of a proposal to switch debt with growth bonds that would allow the country to escape from its credit trap. However, leaked documents from Berlin suggest that Germany will attempt to enforce the original terms of the agreement.
At the London close the Dow Jones had increased by 35.48 points to 17,701.88 and the Nasdaq was down by 1.80 points at 4,227.36.
In London the FTSE 100 closed down by 11.78 points at 6,860.02 but the FTSE 250 edged up by 1.34 points to 16,571.64. The FTSE All-Share slipped by 4.96 points to 3,680.18 while the FTSE AIM Index rose by 0.76 points to 693.69.
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Broker Notes
Shore Capital has given a “hold” stance to struggling supermarket chain Tesco (TSCO) . This came after the news that the firm had paid settlements worth a combined 2 million pounds to ex-CEO Phillip Clarke and former CFO Laurie McIlwee while the market awaits the outcome of investigations into alleged wrongdoings carried out under the previous management. Tesco shares dropped by 2.75p to 229.55p.
Exploration and production outfit Nostra Terra Oil & Gas (NTOG) has had its status as a stock to “buy” reiterated by Northland Capital after the firm published its production figures for the fourth quarter of 2014. The broker said that despite the obvious effect of declining oil prices on the firm, output had substantially improved since September and Nostra Terra appears well positioned for the future. The shares grew by 0.01p to 0.17p.
Cenkos has taken a positive view of explorer Empyrean Energy (EME), rating the shares as a “buy” after the firm announced that its had cancelled its proposed sale. This comes after the completion of a strategic review and in light of the recent drop in oil prices. The broker believes this to be a prudent move, as production has been scaling up at the company’s fields. However, Cenkos cut its target price on the stock to 16p. Empyrean shares fell by 0.75p to 5.25p.
Broker pumps up Empyrean with a “buy” rating
Blue Chips
Broadcaster and entertainment firm Sky (SKY) recorded revenues of 4.3 billion pounds for the six months ended 31st December, a 17% increase over the same period of the prior year as the company added 204,000 new customers and absorbed the operations of Sky Deutschland and SKY Italia. Management are confident in their content package for 2015 and believe it will resonate with viewers. The shares grew by 12.5p to 955.5p.
Investment management outfit Hargreaves Lansdown (HL.) increased its assets under administration to a record level 49.1 billion over the six months ended 31st December despite a decelerating rate of net inflows relative to the same period of last year. The interim dividend has been raised by 4% to 7.3p and management expect strong trading ahead of the close of the tax year. The shares declined by 79p to 966p.
Hargreaves’ assets up but growth slowing
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Mid Caps
Medical services provider Synergy Healthcare (SYR) earned revenues of 303.1 million pounds over the nine months ended 31st December, an 5.7% increase over the same period of the prior year. This was driven by a particularly strong performance in the most recent quarter. The firm’s profitability also rose as margins improved by 50 basis points. Synergy shares, on which broker Canaccord Genuity has a “hold” stance”, grew by 4p to 2,195p.
Polymer solution manufacturer Victrex (VCT) sold 967 tonnes during the three months ended 31st December, more than 42% higher than in the equivalent period last year due to contributions from the consumer electronics division. Group revenue of 59.8 million pounds was 14% ahead of the prior year. Management said that the company had made a solid start to 2015 and has maintained its existing guidance for the rest of the year. The shares dropped by 16p to 2,092p.
Victrex builds polymer values
Small Caps
Residential letting franchise MartinCo (MCO) recorded an 8% year-on-year increase in franchise Management Services Fees and a 24% rise in total group revenues, of which a substantial portion is attributable to the acquisition of franchise business Xperience. The firm increased its total number of tenanted, managed properties within the core business by more than 1,500. MartinCo shares climbed by 1.5p to 101.5p.
Luxury interior furnishings firm Walker Greenback (WGB) said that it performed well in the second half of the year ended 31st December and management believe that group sales for 2014 will be around 6.4% higher than last year, at around 83 million pounds. The company also said that adjusted profits before taxation will be towards the top end of analysts’ forecasts. The shares rose by 4.5p to 200p.
Bargain Booze operator Conviviality Retail (CVR) has agreed terms for the purchase of Yorkshire and East Midlands-based convenience store chain GT News in exchange for a net cash consideration of 6 million pounds. Management said that this will complement the firm’s recent acquisition of Rythym and Booze and provide supply and logistical synergies within the region. The shares, on which broker Panmure Gordon has a 209p target, dropped by 0.5p to 131.5p.
Real estate investment trust Secure Income (SIR) noted speculation regarding the sale of its Madame Tussauds investment property and confirmed that following unsolicited offers, it has appointed CBRE to undertake a marketing campaign ahead of a potential disposal of the building. The current lease runs for at least 27 more years with an option to extend for a further 70. The shares fell by 5p to 292.5p.
Tussauds waxed on the market
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