The week ahead: Sky, Lloyds, Tullow, Reckitt Benckiser, AstraZeneca, Merlin
24th July 2015 17:02
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Monday 27 July
Broker Jefferies expects "decent" first-half numbers from consumer goods giant at the beginning of the week.
"Strong Q1 top line momentum, a similar Q2 comp and robust margin momentum out of FY14 leads us to expect a decent H1," says equity analyst Martin Deboo.
"On the key metrics, we go for Q2 organic growth of 4.8% (cons 4.6%), H1 margin progression of 100bps (cons 80bps) & H1 EPS of 97.5p (cons 97.0p). Our FY numbers remain unchanged at constant fx. Fx changes since May reduce headline EPS by <1%."
Anticipating a good year in the round for Reckitt's bottom line and the ability to "surprise on the upside", Deboo maintains his 'buy' rating and 6,750p target price.
Trading statements
Reckitt Benckiser.
AGM/EGM
EPE Special Opportunities.
Tuesday 28 July
Trading statements
Ebiquity, Shawbrook Group, Hutchison China Meditech, Domino's Pizza Group, ITV, John Laing Infrastructure Fun, Tullett Prebo, Burford Capital, Greencoat UK Wind.
AGM/EGM
Vodafone Group, Amiad Water Systems.
Wednesday 29 July
Broadcaster will reveal year-end numbers mid-way through the week. And while results should be relatively healthy, Roddy Davidson at Westhouse Securities suggests the stock could be moving towards "overvalued territory".
Davidson has pencilled in revenue growth of 51% to £11.52 billion, as a result of Sky Deutschland and Sky Italia acquisitions. Expect full-year pre-tax profit of £1.16 billion, EPS of 53.8p and a dividend of 33.5p.
"These results should also provide a good opportunity to gauge the company's current view on potentially significant external factors, including Ofcom's strategic review of digital communications, the thorny issue of future re-transmission payments, broadband pricing / the competitive threat from and streaming services, and on-going inflation in sports rights costs," adds the broker, who will use this month's results to review its 'neutral' recommendation.
Sky's stock has surpassed Davidson's 985p price target but has a long way to go if it's to reach Deutsche Bank's bullish 1,500p target.
Trading statements
Sky, Capita, Renishaw, Wizz Air Holdings, Greggs, Rightmove, Indivior, Lancashire Holdings, Riverstone Energy Limited, Edita Food Industries, Mitchells & Butlers, Foxtons Group, Capital & Counties Properties, Smurfit Kappa Group, Telecity Group, 4imprint Group.
AGM/EGM
EMED Mining Public, Tongaat Hulett, Dragon-Ukrainian Properties & Development, Weiss Korea Opportunity Fund.
Thursday 30 July
UK pharmaceutical firm , the largest holding in Interactive Investor's most-bought fund , will report second-quarter results on Thursday.
JP Morgan expects an in-line quarter on the numbers, but more important may be whether "Astra can do anything to improve sentiment on the pipeline, which doesn't look fully valued, with Astra trading at the largest embedded value discount in the sector (17% upside, vs. sector trading in line with EmV).
"Trading on a trough cash forward P/E of c.19x, we see limited downside to current levels, whilst waiting for pipeline sentiment to improve." JPM has a 'neutral' rating on the stock.
Madame Tussauds and Alton Towers owner is due to report first-half results Thursday. JPM forecasts revenue of £340 million, cash profit of £124 million and EPS of 3p.
Expect the best growth from Merlin's Midway division (SEA LIFE, The Dungeons etc), where the broker expects 6.8% like-for-like growth. JPM has a 'neutral' recommendation on the shares.
Trading statements
Victoria, Astra Zeneca, Schroder Real Estate IT, Centaur Media, Megafon, Samsung, Electronics, Royal Dutch Shell, BAE Systems, Smith & Nephew, Hong Kong Land Holdings, Telefonica, Countrywide, Intu Properties, Merlin Entertainments, RPS Group.
AGM/EGM
Bluecrest Allblue Fund, Elektron, Argo Group.
Friday 31 July
oil explorer first-half results at the end of the week will be significantly impacted by the fall in oil prices, according to Westhouse's Mark Henderson.
The firm published a detailed trading statement at the beginning of the month so there will be few surprises. Henderson currently puts yearly production at 74,400 barrels of oil equivalent per day (boepd), sales at $850 million and cashflow at $524 million.
"Tullow reported that it is making good progress with its plan to reduce costs and also reported that the TEN development remains on track for first oil in mid-2016. The market will seek updates on both these items in particular," adds the broker, with a 'buy' rating and 590p target price.
Fellow blue chip also publishes second-quarter results Friday. Rebuilding his model ahead of the event, Deutsche Bank analyst David Lock has come up with a new share price target for the high street bank.
Adjusted EPS estimates for the full-year are reduced by 3% to 8.1p, and by 13% and 10% for the following two years to 7.2p and 8p, respectively. An 8% tax hike from next year, the result of George Osborne's Summer Budget in which the chancellor announced the new surcharge on a bank's UK profit, is partly to blame. The deconsolidation of is worth about five basis points off net interest margin (NIM), and Lock also factors in Additional Tier 1 (AT1) costs.
But even after these adjustments, Lloyds trades on a modest forward price/earnings ratio of 10.9 times and on 1.6 times tangible net asset value (TNAV). Deutsche pencils in a 14.6% return on tangible equity (RoTE) in 2015 and Common Equity Tier 1 (CET1) ratio of over 14%.
"We believe that a sum of the parts approach to valuing LBG is most appropriate, and we now take into account excess capital in 2017 over 13% CET1, as well as cash dividends paid up to 2017," writes Lock. "Discounted back this gives a target price of 100p, up from 97p previously. 'Buy' says the broker.
Read: Upgrades as Lloyds prepares Q2 reveal.
Trading statements
Jardine Strategic Holdings, Jardine Matheson Holdings.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.