Market Report: Investors snap up Photo-Me after bullish note

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The Independent Online

After three months of heavy falls, investors returned to Photo-Me International yesterday. Among those buying into the photo booth operator to digital technology developer was a belief that the group's upcoming results are set to impress.

After three months of heavy falls, investors returned to Photo-Me International yesterday. Among those buying into the photo booth operator to digital technology developer was a belief that the group's upcoming results are set to impress.

Photo-Me has seen its share price lose about one-third of its value since April. Shares in the group were hit particularly hard last week amid rumours that directors are looking to offload a sizeable stake in the company. A close look at Photo-Me, however, reveals that such a scenario is unlikely.

Firstly, directors are forbidden from trading in their own shares shortly before results statements. Secondly, Serge Crasnianski, the Photo-Me chief executive, is the only director with a sizeable holding (he controls 19.6 per cent of the group) and has recently added to his stake at levels well above the present share price. To see him selling at current levels would be unlikely.

Meanwhile, Evolution Beeson Gregory put out a bullish note ahead of the group's results, which it expects to be unveiled early next week. Urging its clients to buy into the stock, the broker said it was surprised by the heavy falls registered by Photo-Me shares of late. Evolution tips full-year profits at the company to come in at £20m, compared with a loss of £3m last year, and believes the strong trading momentum has continued into the group's new financial year.

It told investors not to be surprised if the production of Photo-Me's Minilabs, which process digital photographs, easily top forecasts in the year ahead. Such comments left Photo-Me 3.5p better on the day at 87p. Elsewhere, Numis Securities helped push Matalan shares 4.25p higher to 203.25p. The broker raised its price from 190p get to 240p and suggested that value retailers such as Matalan are enjoying strong trading at present. Numis also raised its 2005 profits forecasts for the group to £84m from £73m.

Blue chips had a quiet session, with the FTSE 100 index closing 3.6 points lower to 4,502.2. MmO2 dropped 2p to 94.75p while its rival Vodafone retreated 1.25p to 125.5p amid concerns about the intense competition among the UK's mobile phone operators. "The UK mobile phone market remains one of the toughest in Europe," Credit Suisse First Boston warned yesterday. Royal & SunAlliance jumped 3p to 84p as the insurer confirmed it was in talks to sell its life business.

There was a lot more excitement among small caps. MSB International jumped 5.5p to 74p on rumours that a large stake is about to change hands in the group. According to the gossips, a buyers is looking to pick up a 25 per cent stake in the group.

Unicorn Asset Management is MSB's biggest shareholder, with 29 per cent of the company, but market professionals believe the fund manager is unlikely to part with its holding at current levels.

The wider recruitment sector was in demand. Harvey Nash gained 7p to 73p, Northern Recruitment added 13p to 147.5p and Spring Group put on 4.5p to 117.5p. Dealers believe business is set to pick up for the industry and tipped the sector as ripe for consolidation.

Desire Petroleum gained 2p to 28p despite a warning from the company that it knew of no reason for the recent surge in its share price.

Desire shares have doubled since the start of the month on rumours of an oil find at its site in the Falkland Islands. The company said that work on seismic data from its site is progressing to plan and indicated that it would make public the findings shortly.

An even more dramatic statement was issued by Griffin Mining, down 0.5p to 20.25p. The metals explorer assured the market that there was no operational or financial reason for the recent drop in its shares, but that the retreat is the result of the company's shares having been listed on the Berlin Stock Exchange without its consent.

Griffin believes this has been done by certain brokers to facilitate the short selling of the company's shares. The group said it will seek to have Griffin shares de-listed from the Berlin exchange.

Profit-taking after strong results from SectorGuard left shares in the security group 0.25p weaker at 4p. SectorGuard competes with the likes of Securicor and Reliance Security and yesterday unveiled a 45 per cent jump in profits before tax to £300,000. The group is believed to be on the lookout for acquisitions and has more than £3m of debt finance in place for such a purpose. Investors should not be surprised if it unveils a series of contract wins in the near future.

Amino Technologies put on 1.5p to 139p after it emerged that that Fidelity International has taken a 9 per cent stake in the software group. Dealers reckon the fund management giant is keen to add further to this holding. Talk of strong trading at Alpha Airports pushed its stock 1p higher to 87.5p.

MARKET MOVERS

Centrica 221.5p (up 5p, 2.3 per cent). Says it is in discussions aimed at the disposal of its AA car insurance and emergency breakdown division.

BOC Group 932p (up 10p, 1.1 per cent). Talk of a link-up with German rival Linde excites.

Marks & Spencer 360.6p (up 4.5p, 1.3 per cent). Investors await bid developments.

Dixons 164.5p (up 1.5p, 0.9 per cent). In demand ahead of tomorrow's full-year results from the retailer.

WS Atkins 599p (up 29p, 5.1 per cent). Evolution Beeson Gregory urges investors to add to their holdings, telling them to expect robust results from the group today.

MS International 50.5p (up 16p, 46.4 per cent). Unveils full-year pre-tax profits of £1.3m, up from £634,000 a year earlier.

Interregnum 6.25p (up 0.63p, 11.2 per cent). The group secures a contract win for its Metapraxis unit.

Oakgate 23.5p (up 6.75p, 40.3 per cent). Shares registered strong gains but the company says it knows of no reason for the rise.

Raft International 12.5p (up 1.25p, 11.1 per cent). Secures a contract win from utility giant RWE.

GW Pharmaceuticals 133.5p (up 3p, 2.3 per cent). Says it is confident it will get regulatory approval for its Sativex product.

InTechnology 85.5p (up 1.5p, 1.8 per cent). The data storage and data management expert acquires NetConnect, a security training business for £1m.

IAF Group 22.5p (up 2p, 9.7 per cent). Peter Addison, a non-executive, buys 25,000 shares at 21p.

Regus 63p (down 2p, 3.1 per cent). Confirms that it is in talks to buy US peer HQ Global Workplaces.

Vedanta Resources 276p (down 8p, 2.8 per cent). A 44 per cent jump in full-year earnings fails to impress the City.

Ramco Energy 34.5p (down 3.5p, 9.2 per cent). Investors continue to worry about how the group will finance its Seven Heads development.

BG Group 349.75p (down 6.25p, 1.7 per cent). Profit-taking after recent strong gains.

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