Most popular equity research this week | 21 - 25 August

"Strong growth continues on expanding margins. Cash generation excellent. EBITDA / interim dividend grew at 26% / 23% respectively on sales up 20% (1H’17/1H’16). We believe that more than half the sales growth was organic; excluding our estimates of the contributions of IBS/FEML (organic growth in SME division grew at 16%). Gross and EBITDA margins have each risen by >150bps, and more importantly, cash from operations grew 36%, boosted mainly by an improvement in payables. The order book - which provides strong visibility of revenues - has risen by 60% to £41.2m. Net debt at £12.6m is lower than our FY’17 forecast of £13.5m."

Sopheon (SPE)

Interims: value and growth opportunity | finnCap,  24 Aug

Gold Access

Iomart Group (IOM)

Re-visiting investment case, upgrade to Buy | N+1 Singer,  22 Aug

Gold Access

"Iomart has continued to generate robust revenue, profit and cash flow growth, in line with expectations. Despite this, the shares have broadly stayed flat over the last 12 months, underperforming the All Share by c.7%. Re-visiting the iomart investment case highlights the continued attractiveness of its market, a strong track record of organic growth in terms of revenue (c90% recurring) and profits and excellent cash generation (97% conversion) allowing it to fund bolt on acquisitions, organic growth and pay dividends (2.2% yield). We believe this is a highly attractive compounding stock and upgrade to Buy (was under review) with a target price of 388p."

"Frontier has revealed that the title of its third franchise will be Jurassic World Evolution and will launch in summer 2018 on PC, Xbox and PS4. Its release will coincide with the next chapter of the hugely successful film Jurassic World, which was the fourth most lucrative box-office film of all time. The combination of Jurassic Park’s global appeal, the likely level of publicity ahead of Jurassic World: Fallen Kingdom, and Frontier’s proven expertise suggest that Frontier’s third self-published franchise will be its most successful to date. No change to forecasts, but TP increased to 968p."

"Market challenges have been well documented and mostly negotiated thus far by Epwin. Management has elected to take action to reduce costs and capacity in the light of ongoing market conditions. We expect more detail with the release of H117 results on 13 September. Epwin remains in robust financial health and in our view, is in a position to sustain its dividend – currently yielding c 10%."

"PROACTIS has released a brief full year update indicating that trading in the year to July 2017 was in line with consensus expectations following a reassuring number of new business wins. Management’s focus is currently on integrating the Perfect Commerce acquisition, with £1.4m of the targeted £5m of annualised cost synergies realised to date and the rest expected to be realised by the year end as planned. We are encouraged by the performance of the underlying PROACTIS business and make no changes to our forecasts, recommendation and target price pending the release of full year results on 11 October. We remain excited by the increased commercial opportunities for the enlarged group."

"Empresaria’s H1 results confirm the message of July’s trading update, and the outlook for the full year – continued growth in Net Fee Income (NFI) and EPS. Net Fee Income was up 26% (17% at constant FX), adj. Operating Profit +23% (9% at constant FX). This has been delivered against a mixed background for the wider peer group. The big generalists such as Hays or Randstad have maintained growth, but some of the specialist peers (notably Impellam plc.) have encountered headwinds. Empresaria has benefitted, in our view, from a balanced geographic footprint and from its multi niche customer industry base. The company has noted that there has been a slowdown in hiring processes in the UK post-election, but overall the group is on track, and we maintain our FY forecast of 19.5% earnings growth, well ahead of the sector trend."

"Headlam, the leading UK and Continental European flooring distributor, has issued a strong set of interim results, providing extra detail on the positive pre-close update (issued 18th July). Revenues were +4.0% to £342m, with growth driven by expansion in the UK and Continental Europe. Greater collaboration between the business units and the new management style being introduced has resulted in a 103-basis point expansion in the gross margin. Overall Headlam is trading in-line, no change to forecasts. We reiterate our BUY recommendation (TP 700p)."