Stock of the day 16/06/2015 – Premier Farnell PLC

It has been a case of picking itself up and dusting itself off in 2015 for Premier Farnell; it announces its Q1 2015 trading statement on Thursday.

The British tech company, which specialises in ‘electronic system design, maintenance and repair’, saw a big decline across 2014, from £2.23 at the start of the year to £1.77 on January 2nd 2015. Things have been slightly better since the New Year began, and after a low of £1.47 during trading on February 5th, Premier Farnell quickly rose across February and March to reach £1.93 by March 10th. Its climb slowed somewhat from this point onwards, culminating in a 2015 closing high of £1.98 on May 18th following an intraday high of £2.04 the week before. It has slipped from this near-£2 since then, and is currently trading at £1.90 (16/06/2015, IT-Finance.com).


(Source: IT-Finance.com 16/06/2015)

Despite a profit warning at the start of February, the catalyst for its year lows, and a 7.6% decline in profit before tax to £69.1 million for its fiscal 2014, Premier Farnell’s stock price appears to have been much more resilient than it was across 2014. With sliding profits due to a mixture of currency headwinds (issues with the euro caused a £6.71 million decline in full year European revenue despite underlying growth of 1.9% in the region) and the failure to implement cost-cutting measures quickly enough ( which has seen its savings target increase from £6m-£8m to £10m-£12m) Premier Farnell finds itself in a sector that is both ripe for growth AND suffering industry pressure, as evidenced by the similar troubles felt by Oxford Instruments and Imagination Technologies.

The challenges for in the sector have weighed heavy on Premier Farnell in the past year and a half; however, analysts remain bullish in the long term and have given the stock a consensus rating of ‘buy’ with an average target price of £2.06.

Tuesday’s stock news:

Ladbrokes was the beneficiary of an upgrade this morning, with Morgan Stanley raising the betting company from ‘equalweight’ to ‘overweight’, pushing the stock nearly 4% higher in the process. The company had begun to fall last Friday, a trend that carried through to Monday, after its price had initially been inflated by (currently fruitless) takeover talk, so these gains have helped Ladbrokes gain back some ground.

Similarly, British American Tobacco has been raised to a ‘buy’ by Credit Suisse, sending the somewhat beleaguered stock up by 2.5% back to its June 5th level, with analysts noting the company’s ‘consistent track record in consumer staples’ as the key reason for the upgrade.