Financial Trading Blog
Stock of the day 30/06/2016 – Imagination Technologies Group PLC
Given its propensity for large plunges Imagination Technologies has looked remarkably firm in 2016, despite a string of statements largely dealing with Apple’s iPhone slowdown (to which the company proves key microchips). After slumping to £1.04 by the third week of January the stock had managed to rise all the way back to £1.96 by the end of March following the announcement of a robust restructuring plan, the departure of long-term CEO Sir Hossein Yassie and the sale of its Pure digital radio arm. The final boost came from Apple itself, the US giant confirming it had held talks (talks that admittedly came to nothing) to buy Imagination Technologies.
(Source: IT-Finance.com 30/06/2016)
By the start of April it looked like the stock had overexerted itself, with Imagination Technologies gradually sliding from its 3 month highs to hit £1.50 by the beginning of May. Yet once again the stock became the benefactor of M&A chatter, jumping back to the £1.70s as China’s Tsinghua Unigroup took a 3% stake in the company. Since then the stock has lurked between £1.65 and £1.80, despite another profit warning at the end of May stating that its losses would be worse than expected thanks to restructuring costs (of around £50 million) and the write down of unpaid debts. Imagination Technologies sits at a current trading price of £1.84 (IT-Finance.com, 30/06/2016).
In terms of its performance post-full year report it really depends on how severe the company’s losses are. Last year saw Imagination Technologies post a pre-tax loss of £11.95 million, though it appears that fiscal 2016 has seen that figure widen rather than shrink.
Imagination Technologies Group PLC has a consensus rating of ‘Hold’ with an average target price of £1.70.
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