Author: By Nikhil Kumar
ING expects the company’s thoughts on the subject to be “far and away the
most important catalyst” this morning. “Given that the school
sales season is just starting, management should be able to give early
indications,” the broker said, advising investors to keep any concerns
“US schools sales are undoubtedly a famine. But in our view expenditure
will be deferred rather than lost forever,” ING added.
Numis is also taking the long view, saying that Pearson should outperform its
peers, some of whom are facing problems elsewhere in their portfolio, while
others have high leverage. “We view Pearson’s portfolio as resilient
rather than immune, and expect the group to echo its recent comments on the
directional outlook for its businesses,” the broker said.
Today: Wolseley is due to post a trading statement this morning. Investors
will be keen to hear from the new chief executive, Ian Meakins, who took
over following Chip Hornsby’s decision to step down, although Numis warns
that it may be too early to expect a proper outline of his plans.
Nonetheless, any signs that he will take a tougher line on underperforming
assets arelikely to be taken positively, the broker said, adding that the “need
for transformation is still likely to be the key driver of the short-term
Results/Updates: Dialight, National Grid, WSP, Pace, Wolseley and Pearson.
Tomorrow: ARM, the FTSE 250- listed chip designer, is due to publish
second-quarter results tomorrow, and while the company is expected to beat
earnings estimates, consensus upgrades are unlikely, as forecasts “haven’t
fully reflected the weakening of the US dollar”, according to Panmure
Gordon. “Given its later-stage revenue profile, the lack of upgrades
mean that the stock is likely to move sideways in the near term after the
recent rally, as investors rotate back into the more cyclical semiconductor
stocks,” the broker said.
BP should post a modest increase in second-quarter net income on Tuesday,
according to HSBC, as higher oil prices, the group’s US refining bias and
its exposure to non-US gas production help offset the impact of weaker
trading profits, falling European refining margins and soft US gas prices.
The broker is also looking forward to an update on cost-cutting, saying that
the results should “provide further evidence that BP’s restructuring
programme, initiated in mid-2007, is ahead of schedule and likely to beat
its 2009 cost-savings target of $2bn”.
Wolfson Microelectronics is due to publish second-quarter numbers. Consensus
estimates, based on figures from around 10 analysts, anticipate $31.3m in
revenue. “Wolfson has already stated that trading in the second quarter
was expected to be in line with expectations,” Singer Capital Markets
said last week, adding that, with industry destocking having largely run its
course and key customers like Samsung, LG and Apple performing well, the
group may well beat its estimates.
Also tomorrow, the software group Sage is due to post a third-quarter update,
and while the rate of decline in North American revenues should have
stabilised, the overall rate is likely to have worsened owing to falling
revenues in the later-cycle Main European businesses, according to Numis.
“Following strong cost savings measures announced [in May], we do not
expect further cost reduction efforts to be announced with this interim
management statement (Sage explicitly said that cost reduction was done for
the year), although we still fear that they may be necessary in continental
Europe at some point,” the broker added.
Results/Updates: Informa, Croda International, Provident Financial, PZ
Cussons, Sage, BP, ARM and Wolfson Microelectronics.
Wednesday: Results/Updates: BG, Cadbury, CSR, EasyJet, Halfords, Manganese
Bronze, Morgan Crucible, Reckitt Benckiser, Renishaw and St. James’s Place.
Thursday: Deutsche Bank is looking forward to a positive update from BAE
Systems, the aerospace and defence group which is due to post results later
this week. Looking ahead, management should strike a confident tone despite
the difficult defence spending outlook, the broker said.
Results/Updates: Antofagasta, AstraZeneca, Brit Insurance, BT, Centrica,
Charter, National Express, Laird, Reed Elsevier, Rexam, Rolls Royce and BAE
Friday: Results/Updates: Anglo American, British Airways, Jardine Lloyd
Thompson, Keller, Rank, Rentokil Initial, SABMiller, United Business Media
and Vedanta Resources.
Monday: Bank of England reverse gilt auction (£2bn: 10-25 year)
Tuesday: Land Registry House Price index for June
CBI Monthly Distributive Trades Survey
Wednesday: BSA Savings & Mortgage Lending Figures
Bank of England lending to individuals
Sectoral breakdown of aggregate M4 & M4 lending
Net consumer credit & lending (on dwellings)
Friday: GfK consumer confidence survey
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