Wednesday's Stock Market Report from UK-Analyst: featuring BAE Systems, Meggitt, Experian, JD Wetherspoon and Mobile Streams

From UK-Analyst.com: Wednesday 6th November 2013 The Markets UK industrial production increased by more than expected in September according to new data from the Office for National Statistics. The data revealed that Industrial output increased by 0.9% between August and September, above economists' predictions for a 0.5% rise. The industrial sector - which accounts for around 16% of total UK output - benefited from a surge in mining, quarrying, and water management. However, Alan Clarke at Scotiabank said that the numbers merely reversed August's drop. He commented, "Taking the two together shows there was nearly zero growth in the last two months. There can only be better news to come." A day before the European Central Bank is set to announce its latest interest rate decision, two underwhelming pieces of data were released regarding the economic health of the Eurozone. Firstly, it emerged that retail sales in the 17-nation bloc fell by 0.6% in September from August, in a reflection of the continuing financial pressure which consumers find themselves under. Secondly, It was revealed that the rate of growth of the manufacturing sector had slowed in October as Markit's composite purchasing managers' index (PMI) fell to 51.9 points in October from 52.2 in September. Howard Archer, Chief Economist at Global Insight, said, "September's relapse in retail sales fuels suspicion that consumers across the Eurozone will likely remain pretty cautious in their spending in the near term." Defence firm BAE Systems said it intends to slash 1,775 jobs across its UK yards in an attempt to combat falling demand for its services. The firm said 940 staff posts and 170 agency workers will go at its Portsmouth site while over 800 jobs will be cut across its other UK sites as part of the group's new restructuring plan. The costs of the restructuring initiative will be undertaken by the Ministry of Defence. An extract from a company statement read, "The implementation of these restructuring activities will sustain BAE Systems' capability to deliver complex warships for the Royal Navy and secure the employment of thousands of highly skilled employees across the UK." ADVERTISEMENT Get free trading guides from Evil Knievil (How to successfully short stocks), Zak Mir (Top AIM market picks for 2013) and other top financial commentators by CLICKING HERE At the London close the Dow Jones was up by 92.85 points at 15,711.07 and the Nasdaq was down by 5.01 points at 3,383.81. In London the FTSE 100 closed down by 5.15 points at 6,741.69 and the FTSE 250 was up by 36.22 points at 15,403.83. The FTSE All-Share slipped by 0.88 points to 3.587.80 while the FTSE AIM Index grew by 3.15 points at 814.78. Broker Notes Cantor Fitzgerald upgraded its "hold" recommendation to a "buy" stance on engineer Meggitt (MGGT), increasing its target price from 520p to 590p. The broker feels that the company's energy division has the potential to grow to a similar importance as the firm's Aerospace and Defence businesses, despite last week's profit warning. On the subject of this profit warning, Cantor argues that the subsequent fall in share price has been "severely overdone". The shares increased by 10p to 503.5p. Canaccord Genuity cut its "hold" stance to a "sell" recommendation on electronics firm CSR (CSR), reducing its target price from 517p to 460p. The broker cites declining compact camera sales, a lack of Chinese regulation-driven headset sales, and declining legacy revenues as a reason for its downgrade. Furthermore, Canaccord notes that the company's shares are currently trading at premium to its peers on a EV/Operating profit basis and feels that this is unjustified. The shares slid by 2.5p to 515.5p. Panmure Gordon upgraded its "sell" stance to a "buy" recommendation on hotel operator Millennium & Copthorne (MLC), putting its target price under review. With potential asset realisations more visible and trading not as bad as Panmure feared, the broker views the risk around the company as diminishing. Moreover, Panmure is encouraged by the fact that revenue per available room - a key metric in the hotel sector - is increasing across most of the company's markets. The shares inched up by 0.5p to 581.5p. Blue Chips Packaging and paper specialist Mondi (MNDI), revealed that operating profit generated over the three months ended 30th September rose by 25% to 172 million euros (144.7 million pounds). Mondi explained that the improvement was partly as a result of improved market conditions in South Africa as well as reflecting the impact of acquisitions which were completed in 2012. The update comes after Credit Suisse retained its "outperform" recommendation and 1,310p target price last week. The shares plunged by 46p to 1,070p. Housebuilder Persimmon (PSN), claimed that the impact of the second phase of the government's Help to Buy Scheme has so far been ineffective in increasing demand because of the higher interest rates which are attached to the initiative. Despite this, Persimmon still boasts that its private sales rate has been around 45% ahead of the prior year since 1st July, with 3,000 homes sold under the first wave of the aforementioned Help to Buy Scheme. The shares fell by 29p to 1,186p. Credit checker Experian (EXPN) recorded a pre-tax profit of $480 million (298.2 million pounds) for the 6 months ended 30th September, well up on the $73 million (45.3 million pounds) which was recorded in the prior-year period. The surge in profits was a result of the absence of the prior year's charge for financing fair value remeasurements, as well as higher sales. Separately, Experian revealed that it has signed a definitive agreement to acquire US-based Passport Health Communications, Inc., a privately held data and software provider, for $850 million (528.1 million pounds). The shares fell by 81p to 1,182p. Mid Caps Price comparison website Moneysupermarket.com (MONY) revealed that trading over the third quarter of the year was in line with company expectations, with EBITDA over the July-September period up by 26%. The website operator went a step further and said that EBITDA for the full year is now likely to be "mid-single digit percentage ahead of current analyst consensus" as the firm begins to especially benefit from a large number of people switching their energy provider. The shares swelled by 24.7p to 179.7p. Marketing group DCC (DCC) reported an 11.1% increase in revenues to 5.4 billion pounds for the 6 months ended 30th September, dragging pre-tax profits up by 36% to 58.5 million pounds. The company attributed the bulk of the improvement to its Energy business which benefitted from colder than normal weather conditions in the first quarter and the successful integration of acquisitions completed in prior periods. The update comes after Davy Research retained its "outperform" recommendation last week. The shares jumped by 62p to 2,861p. Boozer operator JD Wetherspoon (JDW), reported a 3.7% increase in like-for-like sales over the 13 weeks ended 27th October, while total sales grew by 7.6% over the period. However, the group's operating margin slipped from 8.6% to 8.3% in a reflection of increased labour costs, repairs, marketing and central overheads. Management once again went on to lambast the current VAT regulations on pubs in the UK, claiming that government policies are making it increasingly difficult for the pub industry. The shares were up by 7.5p at 720p. Small Caps Mobile Streams (MOS), the mobile content provider, said that it has recently expanded its partnership with Optus in Australia by being selected to power its brand new eBooks store. This will mean that the stream provider will provide a library of more than 400,000 eBooks, interactive books, audiobooks and book apps for download to Android, iPhone, iPad, PC and Mac. The company went on to boast about its geographical diversification, stressing that it was gaining traction in the Mexican and Colombian markets in particular. The shares fell by 4.5p to 72p. Craven House Capital (CRV) has acquired a 49% interest in three businesses focused on food and agriculture in sub-Saharan Africa for a total consideration of CAD $1.96 million (1.17 million pounds). The transaction will be funded by the issuing of new shares at a price of 1.25p each. The businesses in question have all recently been running at a loss but management stressed that it has the expertise to return the units to profitability. The shares surged by 0.35p to 0.63p. Software group Ideagen (IDEA) claimed that trading over the 6 months ended 31st October showed significant growth over the same period last year. As a result of the group's success, the company has implemented a progressive dividend policy and has committed to issuing a maiden interim dividend of 0.05p per ordinary share. In response to the update Broker FinnCap re-iterated its 27p target price on the company. The shares jumped by 4.25p to 26.875p. UK defence group Manroy (MAN) has been awarded a further 1.8 million pounds contract from a government customer, following a previously announced 1.4 million pounds contract from the same company which was announced back in September. The contract involves Manroy delivering heavy machine gun spares and should be delivered within the first half of the current financial year. The shares grew by 4p to 52.5p. Feedback (FDBK), the technology company, posted increased losses of 673,000 pounds for the year ended in May as the company continued to experience reduced activity from key customers whilst the introduction of new products suffered a number of delays and setbacks. The company - which has now been reclassified as an investment company - said that it was now pursuing other opportunities in the sector. The shares dropped by 0.1p to 0.5p. Victoria (VCP), the carpet manufacturer, swung into a pre-tax profit of 610,000 pounds for the 6 months ended 28th September, well up on the pre-tax loss of 70,000 pounds which was recorded in the prior-year period. The company said that the return to profitability was a result of removing "unnecessary cost" from the business. Looking ahead, the company stressed caution as increasing wool prices look set to constrain profitability prospects. The shares slipped by 0.5p to 242p.

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