Companies: FOUR    JSG   

Analysts Paul Jones and Mike Allen of Numis are well-respected chroniclers of the support services sector. This month, they reiterated their bullish stance on two of their favourite stocks – Johnson Service and 4imprint.

Steered by CEO Stuart Graham, Johnson has just made its biggest acquisition to date under his stewardship, purchasing Dimensions in a £24.7 million deal. The addition of this supplier of corporate wear to the Johnson empire prompted an upgrade in the earnings forecasts for 2004. For the year to December, Allen & Jones expect profits of £25.5 million. On earnings of 31.1p, the business is on a lowly support services multiple of 13.2. Jones and Allen remain buyers at 411p.

The duo also argue that turnaround situation 4imprint is making good progress unlocking value. Forecast profits of £3.8 million for December 2004 should deliver earnings of 13.1p and leave the promotional products play trading on a forward multiple of 10.9. They both believe the 143p shares are worth 175p.

Interestingly, they suggest a £6 target price for another support service stock, international distribution group Diploma, which has acquired 80 per cent of a Canadian diagnostic venture, taking it into a new market. Revised forecasts for September 2005 imply profits of £15.4 million, upgraded from £13.9 million. On earnings of 47.6p, the 544p shares are on a p/e of 11.4. 'At current levels, the shares are in add territory,' they suggest.