Company results support market but investors remain cautious on Greece and UK electionIn a volatile day’s trading, leading shares ended marginally higher, helped by a raft of well received company results but unsettled by a warning on valuations from the US Federal Reserve chair.Among those supporting the market Sage jumped 39.5p to 536p after the accountancy software group said revenues rose 6.2% and profits 4.9% in the first six months and it was on track to meet its full year targets. Management notes that the one-offs in the first half [in areas like Malaysia] are unlikely to reoccur, consequently, management leaves 2015 expectations broadly unchanged at 6% organic growth and 28% margins, As a result, we do not expect material forecast changes. This leaves the shares on a 2015 PE of 19.1 times. Following underperformance all year, this no longer looks extreme, but we continue to see a lack of catalysts that justify a re-rating. Hence we stay at underperform.The imminent decision from the Federal Trade Commission on their US acquisition...is the principal sensitivity from here. The Lorillard share price is voting for a 92% probability of completion, so event risk is apparently low. Should Imperial triumph, bulls will savour the low entry multiple, cost synergies and the tax and financing benefits. Those of a more cautious hue, like us, will worry about the challenge of reversing the fortunes, quickly, of what are some of the fastest-declining brands on the US market. Continue reading...
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