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The Expert View: Blinkx, BAE Systems and Clinigen

Our daily roundup of the best analyst commentary on shares, also including RM and Robert Walters.

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Key stats
Market capitalisation£139m
No. of shares out400m
No. of shares floating314m
No. of common shareholdersnot stated
No. of employees265
Trading volume (10 day avg.)21m
Turnover144m USD
Profit before tax7m USD
Earnings per share0.02 USD
Cashflow per share0.04 USD
Cash per share0.18 USD

*Correct as at 7 Jul 2014

Troubled Blinx needs to find a buyer, said Peel Hunt

A profit warning from AIM-listed Blinkx (BLNX) has been disastrous for the company’s share price and Peel Hunt claims the online video company is now in ‘special situations territory’.

Shares in the compnay fell around 45% last Wednesday, and have been largely flat since. Blinkx was trading at 34.7p at yesterday's close.

Analyst Alex DeGroote suspended his rating and target price and said Blinkx was now in a situation where it would need to find a buyer. He described the conference call last week, where the company announced lower-than-expected trading results for the first half of its financial year, as ‘alarming and confusing’.

‘Blinkx is now clearly in special situations territory, and hoping for a corporate buyer,’ he said. ‘Recovery and/or stabilisation from the first quarter trough is key to forecasts.

DeGroote predicted full year earnings would fall by 50% to around $25 million (£14.6 million) and the share price could ‘prove a very attractive entry level for either institutions or, more likely, a corporate buyer’,

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Key stats
Market capitalisation£320m
No. of shares out83m
No. of shares floating63m
No. of common shareholdersnot stated
No. of employees87
Trading volume (10 day avg.)0m
Turnover£123m
Profit before tax£11m
Earnings per share13.77p
Cashflow per share16.04p
Cash per share13.72p

*Correct as at 7 Jul 2014

Clinigen upgraded despite target price fall

Pharmaceutical company Clinigen (CLINC) has been upgraded despite a lowering of the target price to take into account concerns about the clinical trials supply division.

Investec analyst Nicholas Keher upgraded the stock from ‘hold’ to ‘buy’ and lowered the target price of 560p to 497p after revising earnings per share estimates down for 2015 and 2016. Shares were trading at 389.1p at yesterday's close.

‘Ahead of the full year 2014 trading statement, which is due in the next few weeks and the preliminary results, we revise our estimates with earnings per share down 3% in 2015 and 7% in 2016,’ he said. ‘Our new estimates are below consensus in those years, but ahead for 2014.

‘We think our new estimates have removed much of the risk associated with the clinical trials supply division, which has proven to be volatile. Even against our lower target price, we think the shares offer an attractive opportunity.’

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Key stats
Market capitalisation£140m
No. of shares out82m
No. of shares floating79m
No. of common shareholdersnot stated
No. of employees1820
Trading volume (10 day avg.)0m
Turnover£262m
Profit before tax£6m
Earnings per share7.59p
Cashflow per share13.37p
Cash per share77.20p

*Correct as at 7 Jul 2014

RM downgraded as share price strengthens

Educational software provider RM (RM) has been downgraded following ‘very strong’ share performance.

Numis analyst Will Wallis downgraded the stock from ‘buy’ to ‘hold’ but increased the target price from 178p to 185p. Shares were trading at 167p at yesterday's close.

Wallis said the company’s interim statement had been better than expected and upgraded 2014 profit before tax forecasts by around 10% but left longer term forecasts unchanged.

‘Management continues to execute extremely well, but challenges remain, and given the very strong share performance, we move to “hold” from “buy”,’ he said.

Wallis noted outperformance in education technology and resources but said its network solutions business has been ‘more subdued than expected’ and new products remained ‘at a very early stage’.

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Key stats
Market capitalisation£243m
No. of shares out77m
No. of shares floating66m
No. of common shareholdersnot stated
No. of employees2285
Trading volume (10 day avg.)0m
Turnover£598m
Profit before tax£6m
Earnings per share7.68p
Cashflow per share12.69p
Cash per share39.09p

*Correct as at 7 Jul 2014

Robert Walters recruitment offers ‘significant’ long-term potential

Specialist recruitment company Robert Walters (RWA) is expecting full-year profits at the high end of expectations, leading Liberum to upgrade its earnings per share forecast.

Analyst David Brockton retained a ‘buy’ rating and a target price of 415p on the shares, which were trading at 315.3p at yesterday's close. However, he upgraded earnings per share estimates for 2014 by 7% and by 3% for 2015.

‘Second quarter growth of 12% continues the steady quarterly improvement,’ he said. ‘While foreign exchange headwinds persist, full-year profit is now expected to be at the upper end of market expectations, as double-digit underlying growth aids the profit drop-through.

‘Robert Walters offers significant long-term growth potential as it builds scale in Asia and further improves profit conversion.’

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Key stats
Market capitalisation£13,464m
No. of shares out3,161m
No. of shares floating3,151m
No. of common shareholdersnot stated
No. of employees78000
Trading volume (10 day avg.)6m
Turnover£16,864m
Profit before tax£168m
Earnings per share5.17p
Cashflow per share20.60p
Cash per share71.78p

*Correct as at 7 Jul 2014

BAE set to return to modest growth

Defence giant BAE Systems (BAES) is returning to ‘relative stability’ and growth could be seen as early as next year.

Jefferies analyst Sandy Morris retained a ‘buy’ rating and upgraded the target price from 350p to 500p. Shares were trading at 426.4p at yesterday's close.

Morris said BAE was positioned to ‘return to modest organic growth in revenues’.

‘We believe BAE’s UK and US defence markets are returning to relative stability,’ said Morris. ‘If we layer BAE’s international business on top of stable UK and US markets, there is a good prospect of BAE returning to modest organic growth, perhaps in 2015, more likely 2016.

‘Throw the buy-back programme and attractive dividend yield into the mix and we believe BAE promises an attractive overall return.’

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