The Expert View: AMEC, Kofax and Fidessa

Our daily round-up of analyst recommendations and commentary, featuring AMEC, Kofax, Fidessa, Catlin and Immunodiagnostic Systems.

Key stats
Market capitalisation	£3,399m
No. of shares out	309m
No. of shares floating	294m
No. of common shareholders	not stated
No. of employees	27733
Trading volume (10 day avg.)	1m
Turnover	£3,261m
Profit before tax	£207m
Earnings per share	61.98p
Cashflow per share	76.65p
Cash per share	156.82p

*Correct as at 11 Feb 2013

Seymour Pierce expects good news for AMEC

Seymour Pierce analyst Kevin Lapwood has reiterated his 'buy' recommendation on oil industry supplier AMEC (AMEC.L) ahead of Thursday's full-year results.

The company's aim of generating 100p of earnings per share by 2015 is now likely to be reached earlier, Lapwood said, and AMEC is now looking at double-digit earnings growth for each of the next two years. For this to happen, the orderbook will need to stay at last year's £3.3 billion level, if not the £3.6 billion achieved in June 2012.

'The signs are good,' Lapwood said. 'The company is currently enjoying a strong run of activity in conventional oil and gas activity. (30% of the group). This is in part due to the current period of oil price stability but also to very strong growth in the Gulf of Mexico, where AMEC has benefited from not being a major presence in the region at the time of the Macondo disaster and its strong safety track record.'

Shares in the group closed at £11.04 on Monday, up 3p or 0.3%.

Key stats
Market capitalisation	£248m
No. of shares out	90m
No. of shares floating	66m
No. of common shareholders	not stated
No. of employees	1122
Trading volume (10 day avg.)	0m
Turnover	166m USD
Profit before tax	11m USD
Earnings per share	0.12 USD
Cashflow per share	0.20 USD
Cash per share	0.58 USD

*Correct as at 11 Feb 2013

Kofax on the 'naughty step'

A disappointing set of second-quarter results from business process management firm Kofax (KFX.L) has pushed Investec analyst Julian Yates to put the group's target price under review.

Kofax warned that full-year results would be lower than expected after software licensing revenues fell 24% in the quarter. Overall sales declined 8% and adjusted earnings fell 40% year-on-year.

'A slipped mid-seven-figure deal in Europe, the Middle East and Africa and a reorganisation of the sales force in the Americas, combined with ongoing macro pressure on the group’s core capture business, has resulted in the above reductions in guidance on revenue and profits,' Yates said.

Over at Panmure George O'Connor slashed his forecasts and downgraded the stock to 'hold' from 'buy'. 'Our scenario of Kofax being the market turnaround for 2013 seems unnecessarily starry-eyed. The shares will remain on the naughty step at least until the final results,' he added.

Shares in the group closed at 273p on Monday, down 47p or 14.6%.

Key stats
Market capitalisation	£585m
No. of shares out	37m
No. of shares floating	34m
No. of common shareholders	not stated
No. of employees	1748
Trading volume (10 day avg.)	0m
Turnover	£278m
Profit before tax	£30m
Earnings per share	80.96p
Cashflow per share	169.90p
Cash per share	191.71p

*Correct as at 11 Feb 2013

Merchant Securities lifts target price for Fidessa

Merchant Securities analyst Roger Phillips has increased his target price for trading software maker Fidessa (FDSA.L) following a set of annual results that beat his forecasts.

Revenues of £278.6 million were about 1% ahead of what Phillips had pencilled in. Recurring revenue grew 2% over the year, implying a 2% second-half sequential decline after a 5% rise in the first half. The total dividend for the year increased slightly to 82p, meaning an effective yield of around 5%.

'The outlook statement is steady for FY13 in expecting more of the same, albeit this is slightly ahead of our forecasts,' Phillips said. 'We continue with our long term Buy thesis, as we believe Q3/12 will prove the low watermark for forecasts.'

The analyst's target price rises from £15.10 to £16.80.

Shares in the group closed at £15.87 on Monday, up 60p or 4%.

Key stats
Market capitalisation	£1,857m
No. of shares out	361m
No. of shares floating	335m
No. of common shareholders	not stated
No. of employees	1827
Trading volume (10 day avg.)	1m
Turnover	2,452m USD
Profit before tax	24m USD
Earnings per share	0.07 USD
Cashflow per share	0.10 USD
Cash per share	3.79 USD

*Correct as at 11 Feb 2013

Berenberg Bank downgrades Catlin to 'sell'

Earnings at insurance group Catlinn (CGL.L) look set to remain under pressure over the next couple of years, Berenberg Bank analyst Tom Carstairs has warned, spurring him to downgrade the shares from 'buy' to 'sell'.

'While FY 2012 results missed consensus, our negative stance reflects our view that earnings will remain subdued in 2013/14 as Catlin continues to incur costs associated with its expansion and the build-out of its international operations,' the analyst said.

The second half of last year saw Catlin close the valuation gap with a number of its rivals, Carstairs noted, but he now thinks the shares look fully valued.

'Our revised 12-month forward price target, based on a sum-of-theparts fair value, implies downside to the current share price and we would encourage investors to switch into Beazley within the Lloyd’s sector, which we rate Buy,' he added.

Shares in the group closed at 516p on Monday, down 2p or 0.4%.

Key stats
Market capitalisation	£82m
No. of shares out	28m
No. of shares floating	16m
No. of common shareholders	not stated
No. of employees	324
Trading volume (10 day avg.)	0m
Turnover	£54m
Profit before tax	£5m
Earnings per share	16.17p
Cashflow per share	34.89p
Cash per share	38.93p

*Correct as at 11 Feb 2013

FinnCap welcomes news of development collaboration at IDH

FinnCap analyst Keith Redpath has welcomed news that medical firm ImmunodiagnosticSystems (IDH.L) is joining forces with Diagnostica Stago to develop a new tool to analyse blood-clotting disorders.

Although Redpath said in the short term the move isn't particularly lucrative for IDH, which will receive €1 million from Stago towards development costs, longer term it's a good sign.

'We are reassured that IDS is seeking new opportunities to extract value from the IDS-iSYS platform outside of its own historical focus,' he said. However, as the system is expected to take two to three years to develop, he's keeping his 'hold' recommendation and 260p target price in place for now.

Shares in the group closed at 287p on Monday, up 5.8p or 2%.