What's in store today...

Thursday sees a number of heavyweights reporting, including Royal Dutch Shell (RDSB), AstraZeneca (AZN) and Unilever (ULVR).

Oil titan Shell opens the curtains with its fourth-quarter results. The company had lowered analyst expectations ahead of the results, as a result of tough trading in the downstream business. The quarter also saw a sharp deterioration in refining markets, especially in North America, a weaker European gas market and higher maintenance costs.

Additionally, Shell has been plagued by a leak in its Bonga field, offshore Nigeria, and a lack of success in Tanzania.

"The key outlook in the results will be the cash flow and the dividend outlook," commented Charles Stanley analyst Tony Shepard. "Shell has held the quarterly dividend at 42 cents for three years, but the improved cash flow of the group in 2011, and more importantly for 2012, should give it the opportunity to increase the quarterly dividend," he added.

The shares are trading on a 2012 price to earnings ratio of about eight times.

Investors will be keen to confirm whether AstraZeneca will cut 3,000 jobs and return more than $3 billion (£1.9 billion) to shareholders in the form of share buybacks when it reports its fourth-quarter results.

The rumour, reported by the Sunday Times, is a silver lining for the FTSE 100 company, which has been plagued by a loss of patents on several best-selling drugs such as Nexium, government pricing pressures in the US and Europe and new products failing to compensate.

The pharmaceutical giant, for example, received a response letter from the Food & Drug Administration (FDA) in mid-January, requesting additional clinical data for enhanced assessment purposes for the drug dapagliflozin.

And, at the end of last year, AstraZeneca downgraded analysts' expectations as it announced that its investigational compound olaparib would not progress into phase III development for the maintenance treatment of serious ovarian cancer. In addition, it noted that the second RENAISSANCE phase III study of TC-5214 for patients with major depressive disorder did not meet its primary end-point.

"The company's core earnings per share (EPS) guidance remains unchanged at between $7.20 and $7.40 per share, although it is now likely that core EPS will be in the lower half of this range," the company warned its investors in mid-December.

The shares are trading on a 2012 price to earnings ratio of about nine times - a 33% discount to peer GlaxoSmithKline (GSK), according to Savvas Neophytou, analyst at Panmure Gordon.

James Dawson, analyst at Charles Stanley, was optimistic on the stock, with an 'accumulate' rating. "Initial concerns over the sales implications for Crestor post the introduction of generic Lipitor in November 2011 seem, at this stage, to have been overly pessimistic," he stated. However, he noted that the lack of an initial slump in Crestor sales was only serving to offset weakness elsewhere in the portfolio.

Dawson was less optimistic on Smith and Nephew (SN.), which reports its full-year results on the same day, rating the stock a 'hold'.

"We expect to hear management's opinion on the various segments of the medical devices industry and where pricing and demand is anticipated to trend towards," expressed Dawson. "With significant company sales in the US, any thoughts on reimbursement attitudes will be vital for near-term sales performance. From a volume perspective, the strength or weakness in the elective surgery market will support, or not, the anticipated sales volumes," he added.

And how emerging markets are holding up will be revealed on Thursday when Unilever reports its full-year results.

"The consumer environment looks unlikely to improve in Western Europe, thankfully just a quarter of Unilever's sales, although the US economy looks slightly more encouraging, and we expect emerging market growth to remain strong, albeit slightly below last year's levels," said Graham Jones, analyst at Panmure Gordon.

However, Dawson was more concerned. "Whilst taking a footprint in the emerging market regions makes sense in the long term, it is necessary to consider what degree if margin erosion will be built into earnings," he commented. "This is likely to be a significant feature as expansion in the emerging markets gathers pace," he added.

Unilever has guided that underlying earnings before interest, tax and amortisation (EBITA) margins will be flat to slightly down for the year. "In the context of €2.5 billion of cost inflation expected in 2011, we would define even a modest decline as a resilient performance," commented Jones.

He had a 'buy' rating on the stock, with "strong top-line growth, good market share progression and protecting margins despite weak developed market consumer environments, intense competition, steep cost inflation, natural disasters and geopolitical disruption".

Shares in the company are currently trading on a 2012 price to earnings ratio of between 14 and 15 times.

Support service company Compass (CPG) will also report its first-quarter interim management statement on Thursday.

"The group's exposure to North America, accounting for 48% of earnings before interest and tax (EBIT), combined with our view that food cost inflation has peaked, underpins the structural attractiveness of the stock," said Simon French, analyst at Panmure Gordon, stressing that a combination of cash returns to shareholders and investors' preferences for relatively defensive stocks and dollar exposure meant that the share price offered ongoing upside potential.

The stock is trading on a 2012 price to earnings ratio of between 13 and 14 times, with a dividend yield of about 3.7%.

On the economic front, Thursday will see the construction purchasing managers index being published.

Howard Archer, chief UK and European economist at IHS Global Insight declared it was "evident" that the construction sector currently faces an extremely challenging environment.

"The government's public spending cuts are limiting overall expenditure on public buildings, schools and hospitals. On top of this, housebuilding activity is likely to be constrained by persistently weak housing market activity, soft prices and a worrisome outlook. And if the economy continues to struggle markedly over the coming months, there is the likelihood that construction activity will suffer increasingly from projects being put on hold or cancelled altogether," he noted.

However, the construction sector does stand to benefit from the government's measures to boost infrastructure that were outlined in last November's Autumn Statement.

In addition, the government is looking to boost house building through instructing government departments to release state-owned land to be built on under a "Build Now, Pay Later" scheme. The government has also announced a £400 million "Get Britain Building" investment fund aimed at reviving stalled housebuilding projects.

Thursday 2 February

Trading updates

AstraZeneca, Great Portland Estates, Royal Dutch Shell, AstraZeneca, Smith & Nephew, Unilever, Investec

AGM/EGM/Special Meetings

Baltic Oil Terminals.