Companies: DTY    JHD    RM.   

Analyst Keith Ashworth-Lord likes the look of Dignity, the UK’s only listed funeral services provider, retaining his 920p target price for the 730p shares following an upbeat update.

For the quarter to March, revenues at acquisitive Dignity increased by 8.6 per cent to £46.9 million and operating profits were 6.6 per cent ahead at £17.7 million. Since the start of the year, Dignity has acquired nine funeral homes and one crematorium and cemetery for a total cost of £17 million and trading remains in line with expectations. Reassured, Ashworth-Lord still envisages full-year pre-tax profits of £34 million from sales of £170.3 million.

He also initiates coverage on AIM-traded James Halstead – undervalued at 562p – with a buy, based on the group’s strong positioning in commercial, contract and residential flooring products, exposure to public sector spend and strong dividend history.

Back to school
Analyst Matthew Davis has downgraded his 12-month recommendation on RM from outperform to hold, highlighting short-term risks to earnings, including order deferrals or product delays, at the small-cap provider of software, services and systems to UK education.

Such factors offset positive developments, including record committed revenues and an excellent win rate on Building Schools for the Future projects. Recent interims reflected the business’s pronounced second-half weighting, revealing a profits dip from £2.2 million to £600,000 and an earnings retreat to 0.5p (2007: 1.7p). Now 206.75p, Davis stresses RM ‘has always been a longer-term play’ and urges investors to buy ‘below the 200p level if the opportunity arises’.