The week ahead: ASOS, Marks and Spencer, Ithaca
27th March 2015 18:12
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Monday 30 March
Economic news
Household lending figures for February will be released at the start of a busy economic week domestically.
Housing market turnover appears to be recovering following a lull through 2014, according to Investec's Philip Shaw. Based on a modest increase in approvals from British Bankers' Association he predicts a rise in the official number from 60,800 from 61,600.
"If proven correct, this would represent the highest level of approvals since August last year and be consistent with a continued, albeit gradual, strengthening in housing market conditions," says Shaw.
Investec's forecast for net mortgage lending is an increase of £1.6 billion (in the same territory as the previous two months).
Trading statements
Globaltrans Investment, Instem, Learning Technologies Group, Outsourcery, Plant Health Care, Central Asia Metals, AA, XLMedia, Al Noor Hospitals Group, Compass Group.
AGM/EGM
Turk Ekonomi Bankasi As, Northern Investors Company.
Tuesday 31 March
North Sea focused oil and gas operator will release full-year results on Tuesday. Broker Westhouse Securities expects sales of $385.2 million and earnings per share of $0.06.
"We anticipate full year 2014 pro forma production to be around 12.5kboe/d (we forecast accounting production), as previously released by the company. Base production in 2015 excluding the Greater Stella Area (GSA) is expected to be c.12kboe/d and GSA is expected to add c.16kboe/d once it is on-stream," says Westhouse analyst Jamal Orazbayeva.
Chancellor George Osborne announced a series of tax changes for the UK North Sea (UKNS) oil industry during the recent Budget, which will benefit Ithaca, as well as operators , and .
In a note released after the Budget, Westhouse explained that since the cuts benefit existing producers and especially those with older fields in the portfolios, some stocks benefit more than others.
"Our risked valuations of the P&D assets for EnQuest and Ithaca Energy have increased by 20% and 15%, respectively," says the broker, with a 'buy' rating on the stock and an 80p target price.
Read, 10 UK oil stocks affected by the Budget.
Economic news
March's GfK consumer confidence measure, the second revision of Q4 GDP and Q4's current account deficit will all be revealed on this day.
Investec's Victoria Clarke suspects governing politicians will be looking for clues on whether they could be the "lucky recipients of a pre-election boost to sentiment" when the GfK index is released.
"We envisage another notching up with the March reading up to +2 as the improving jobs backdrop and extra cash in the pockets of consumers from low inflation, help to improve the public mood," says Clarke.
Second estimates of GDP confirmed that the UK economy grew 0.5% in Q4 - Investec does not feel strongly about the forthcoming number - calling it unrevised at 0.5%.
However, Shaw says there is a marginally greater chance that it will be revised up rather than down.
After Q3's "horrific" and "record-breaking" current account deficit (£27 billion), Shaw estimates that Q4"s deficit narrowed to £23.2 billion, resulting in a shortfall for 2014 as a whole of £94.6 billion (5.3% of GDP).
Shaw hopes the picture will improve this year on a pick-up from earnings overseas.
Trading statements
James Halstead, Inland Homes, Ocean Wilson Holdings, LiDCO Group, Hydrodec Group, Kingfisher, Chesnara.
AGM/EGM
Hume Capital Securities, Turkiye Garanti Bankasi, IRF European Finance Investments.
Wednesday 01 April
Online fashion retailer will publish interim results, with broker Jefferies increasing its target price to 3,500p after the stock pushed above its previous 2,500p price target a while ago.
"The ASOS forward fashion offer remains highly differentiated and connects powerfully with the target demographic," says Jefferies. "The senior management team appears to be back on the front foot operationally and once again, setting the agenda from a communication perspective."
They see full-year revenue coming in at £1.19 billion (+22% year-on-year), earnings before interest, taxes, depreciation, and amortisation (EBITDA) at £69.1 million (+11%) and EPS at 44.3p (-0.4% year-on-year).
While acknowledging a "cracking performance" in the second-quarter and the "high quality" senior management team, Jefferies says risks remain, most notably competitive overlap with Zalando and euro currency headwinds. They cut their rating to 'hold'.
Economic news
The manufacturing PMI for March released on Thursday should continue to be unpinned by rising volumes of new business from domestic clients, says Clarke.
And with improvement in the Euro area economy benefiting externally focused UK producers, Investec look for a modest firming in the UK's PMI, pencilling in 54.4 from 54.1.
Trading statements
ASOS, Globaltrans Investment, Instem, Learning Technologies Group, Outsourcery, Plant Health Care, Central Asia Metals, AA, XLMedia, Al Noor Hospitals Group.
AGM/EGM
FirstGroup.
Thursday 02 April
will release fourth-quarter results on Thursday. UBS and Investec recently upped target prices on the retailer's stock from 500p to 590p and 580p respectively.
Both brokers highlight International profits as a potential weakness for the group.
"International remains challenging with Russia a drag and further Euro weakness. While we maintain our overall FY15E PBT of £646 million (consensus £641 million), we cut International EBIT to £103 million (prev. £125 million) to reflect currency," Investec says.
Swiss outfit UBS expects full-year revenue of £10.44 billion (Investec £10.28 billion), PBT £635 million (Investec £646 million) and EPS of 31.6p (Investec 32.9p).
Marks and Spencer trades on a "small discount to peers reflecting its track record", says UBS, but this could be set to change, especially as "gross margin gains should see above average growth in PBT and cash flow over the medium term".
'Buy' say the brokers.
Home furnishing retailer will release a Q3 trading update. Deutsche Bank say the firm faces "increasingly challenging prior year comparatives" moving into Q3 and is yet to benefit from the website relaunch.
Deutsche forecast 1% growth in like-for-like sales and 7.8% growth in total sales growth for the quarter.
"We will look for an update on the new online platform. After the launch was delayed from last autumn, this is now expected to go live by April 'at the latest'," says Deutsche analyst Charlie Muir-Sands.
He reduces his target price to 860p from 930p but maintains a 'hold' rating on the shares.
Trading statements
Dunelm Group, Tate & Lyle, Booker Group, Marks & Spencer, Forbidden Technologies.
AGM/EGM
Amino Technologies.
Friday 03 April
Trading statements
AGM/EGM
Public Power Corp S.a.