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The Expert View: Huntsworth, Aveva and Inmarsat

Our daily roundup of the best analyst commentary on shares, also including Synthomer and SThree.

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Key stats
Market capitalisation£136m
No. of shares out325m
No. of shares floating220m
No. of common shareholdersnot stated
No. of employees1669
Trading volume (10 day avg.)0m
Turnover£172m
Profit before tax£13m
Earnings per share4.91p
Cashflow per share6.41p
Cash per share2.66p

*Correct as at 14 Jul 2014

Huntsworth ‘under review’ after poor first-half show

Huntsworth (HNTS) has been downgraded after the public relations group issued a profit warning over its revenues for the first half of its financial year.

Peel Hunt analyst Malcolm Morgan placed the ‘small cap’ stock, chaired by Labour peer Paul Myners, ‘under review’ from ‘hold’, doing the same for the target price which was previously at 60p.

Huntsworth said yesterday in a statement to the market that first-half results would be ‘below market expectations’. It added: ‘The board is reviewing the second half-year and, while there is work to do, we believe that the second half will show improvement over the first half-year.’ Shares fell over 15% to 44p in yesterday's trading as a result.

Morgan said the warning ‘does not quantify nor attempt to explain the causes of the short fall’ and ‘nor does it indicate in which divisions the short fall is arising’.

‘In speaking to [chief executive] Peter Chadlington this morning, he notes the scale of the investments made in the first half have and that as yet they have not generated the expected level of revenue,’ he said. ‘The investments are being made in digital capability across the group.’

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Key stats
Market capitalisation£730m
No. of shares out340m
No. of shares floating266m
No. of common shareholdersnot stated
No. of employees2097
Trading volume (10 day avg.)0m
Turnover£1,055m
Profit before tax£48m
Earnings per share14.06p
Cashflow per share27.80p
Cash per share19.07p

*Correct as at 14 Jul 2014

Synthomer upgraded after latex problems resolved

Chemical maker Synthomer (SYNTS) has been upgraded after it improved sales volumes and quantified an issue over a type of latex.

Numis analyst Charles Pick increased his rating from ‘add’ to ‘buy’ and retained a target price of 300p on the shares, which were trading at 215.1p yesterday.

‘The foreign exchange debit expected this full year has been lifted by £1 million and the first half damage from nitrile latex issues has been quantified but we see no reason to downgrade for 2014,’ he said.

Pick added that it was ‘encouraging’ that ‘destocking’ by glove makers had concluded and ‘European volumes for Synthomer continued to improve in the second quarter’.

He added that trading in Europe was ‘stable’ with ‘demand higher second quarter on second quarter [last year] in northern Europe’.

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Key stats
Market capitalisation£482m
No. of shares out124m
No. of shares floating100m
No. of common shareholdersnot stated
No. of employees2327
Trading volume (10 day avg.)0m
Turnover£634m
Profit before tax£7m
Earnings per share5.47p
Cashflow per share9.76p
Cash per share11.08p

*Correct as at 14 Jul 2014

SThree to deliver increased profits over several years

Specialist recruitment company SThree (STHR) is expected to deliver multiples of current profits over the next few years.

Liberum analyst David Brockton reiterated a ‘buy’ rating and a target price of 475p after first-half profit before tax was up 24% in line with his forecasts despite ‘faster growth in headcount than gross profit through the period’. Shares fell 2.4% to 385.4p in yesterday's trading.

‘Improvement in growth has continued into early third quarter. In the short-term, further work is required in Perm to meet our full-year forecasts,’ he said. ‘Nevertheless, prior investment in newer sectors and regions is now delivering strong growth positioning SThree to deliver multiples of current profit over the next several years.’

He added that SThree remained ‘well placed to deliver significant upside’ and had a ‘high proportionate exposure to recovery potential in the UK’.

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Key stats
Market capitalisation£3,352m
No. of shares out448m
No. of shares floating413m
No. of common shareholdersnot stated
No. of employees1622
Trading volume (10 day avg.)1m
Turnover737m USD
Profit before tax60m USD
Earnings per share0.13 USD
Cashflow per share0.43 USD
Cash per share0.19 USD

*Correct as at 14 Jul 2014

US plans to use commercial satellites could boost Inmarsat

Rumours that the US government plans to switch to a commercial satellite provider could be a boost to global satellite network Inmarsat (ISA).

Jefferies analyst Giles Thorne retained a ‘buy’ rating and a target price of 920p following press suggestions by industry magazine SpaceNews that the US government would ditch its proprietary satellites. Shares were trading at 745.9p at yesterday's close.

‘SpaceNews make it clear that this is just one option being considered as part of a wider review process initiated in early 2014 to review US military satellite requirements, with the obvious context being one of perhaps rationalising spend in a tougher budgetary environment,’ said Thorne.

‘We see the rumours reported on by SpaceNews as the potential crystallisation of a material catalyst with our…US government opportunity argument.’

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Key stats
Market capitalisation£1,308m
No. of shares out64m
No. of shares floating63m
No. of common shareholdersnot stated
No. of employees1432
Trading volume (10 day avg.)0m
Turnover£237m
Profit before tax£51m
Earnings per share77.99p
Cashflow per share89.93p
Cash per share121.89p

*Correct as at 14 Jul 2014

Aveva a ‘buy’ despite currency headwinds

Investec is expecting 2014 profits for engineering software provider Aveva (AVV) to be slightly down on previous forecasts but has maintained a ‘buy’ rating.

Analyst Julian Yates kept a target price of £28 on the shares, which are trading at £20.42, despite the impact of currency pressure on the company.

‘The first quarter interim management statement signalled no change to the demand backdrop since the full year 2014 results, which were well received,’ he said. ‘Foreign exchange (FX) is still a head wind – we tweak full year 2014 profits down 1% for recent FX moves.'

Yates added that profits were expected to be ‘weighted’ to the second half of the year due to ‘a couple of large token deals’.

‘The second-half weighting comment may mute the stock a little, but we stay at “buy” based on the broader growth trends the group is exposed to,’ he said.

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Profile: The opportunity set that attracted Brett Williams to wealth management

Profile: The opportunity set that attracted Brett Williams to wealth management

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