Share Talk Expected Market Updates For The Week Ahead – 6th December 2021

The announcements for next week might have to be rewritten quickly following the spread of the omicron version of Covid-19.

Rolls-Royce and Stagecoach, as well as AB Foods, must have hoped they were seeing Covid-19 or at least the worst, in the rear-view. But once again, everything is up in the air.

Although it is too early to draw firm conclusions, you can expect new restrictions to be discussed heavily and a cautious tone to all statements.

The high tech plastics group Victrex PLC (LSE: VCT) has been through a difficult few months. UBS expects a mixed update on Monday.

Due to the construction of the new China plant, the broker anticipates higher operating and capital costs over the next twelve months.

UBS claims that subdued trading may exist in the automotive and aerospace branches of the company in short-to-long terms.

It has therefore remained conservative with its forecasts for the next financial year.

The consensus for the year is that underlying profits will be £91.9mln, with net cash at £53mln by year-end.

You can also get a special dividend of 45p, bringing the total payout to 88p.

 Ashtead Group (LON: AHT) an equipment-hire firm, has set a high bar ahead of Tuesday’s financial results. The market price is currently just slightly below its all-time highs. Ashtead was bullish during the run-up and will have to live up to his expectations.

Analysts at AJ Bell stated in a note that the firm had beaten recession and pandemics in 2020 better than anticipated. They also recovered faster than analysts expected in 2021 due to how it gets 80% of its revenues from Sunbelt in America (the rest is from Canada and the UK).

“The US economy has recovered strongly from the 2020’s short and sharp downturn. The Biden administration’s expansionary fiscal policies, with a focus on infrastructure spending, seem to have put Ashtead in quite a sweet spot.”

Investors will be interested in an update on the dividend, which has maintained growth through this pandemic. They also want to keep an eye out for share buy-backs, since a campaign has spent approximately US$200mln so far.

Barclays is one of many sceptics of British American Tobacco. They believe the cigarette giant should perform better.

In spite of the fact that people are reportedly working harder during lockdown periods, growth has fallen below 7% long-term guidance over the past two years.

BAT blames South Africa’s ban on 2020, as well as the foreign exchange fluctuations in 2021. Barclays however points out that it is not prioritising its next-generation products enough. This area is where Barclays has an obvious advantage.

BAT has delivered around 6% annual earnings growth in recent years and could continue to do so, suggests the UK bank.

Tuesday will see the British Retail Consortium‘s retail sales monitor (LON: BRC), which will provide some insight into the health of High Street.

The survey is for November. This was before the Omicron version of Covid-19 became public and began influencing shoppers’ behaviour.

Due to the small sample size, the survey cannot be considered a reliable indicator of retail sales volumes. However, economists expect volumes to rise 1.1% year-on-year following October’s 0.2% drop.

JP Morgan has raised its profit estimate to £280mln for Berkeley Group PLC (LON: BKG) a housebuilder that will see the benefits of a stronger London market.

Recent data points to strong demand for new builds, rents, and home buying interest, according to JPM. Berkeley is expected to improve its guidance with its interims.

Berkeley Group shares have fallen 8% in the past year, which is a significant underperformance of the sector, according to the US bank. This puts them on an average sector valuation, as opposed to a historical premium that was 50%.

JPM believes that this is attractive, even though JPM has lowered its share price target to 5,500p instead of 5,848p.

Stagecoach Group PLC, (LSE: SGC) has been shrinking over the past few years but is now back at its core of operating buses.

Although the merger with National Express is still under discussion, the deadline for submission is 14 December. Bus passenger numbers are likely to recover quickly.

The regional bus division passenger volume was approximately 70% as it was in October 2019. Some areas have seen it rise to 80%.

UBS stated that it will be monitoring “the outlook for wage rises and driver availability, as well as the group’s balance sheets and leverage position.”

The broker anticipates that revenues for the six-month period will reach £532mln, with an adjusted operating profit of £25.7mln.

Dr Martens PLC, (LSE: DOCS) the maker of the famous cushion-soled shoes and boots, will announce its half-year 2022 results Thursday.

Barclays just raised its recommendation for the shares to “overweight” from “equal weight”. It believes that the shares are worth at least 480p. This is 20% more than its current price of 400p.

It said that the 20% decline in value over six months was ‘overdone’, particularly since it followed its IPO guidance.

Barclays cites the departures by the chief marketing and chief technology officers, as well as the absence of an earnings narrative and Covid and supply chain concerns as the main reasons.

It stated that it liked the brand’s exposure and believes the company can still grow through significant headroom in many markets, conversion of the market, rationalisation wholesale and an improved DTC [direct to consumer] mix.

Rolls-Royce was supposed to be a story of recovery, but the outbreak of the omicron has made that impossible.

Airline orders had been increasing prior to last week. The Trent 1000 engine, which was causing problems, was under control, and there is growing interest in the mini-nukes project.

With omicron now threatening travel restrictions, all bets are off again. However, the new variant has just been identified so the numbers backwards-looking should still be okay.

Analysts focus on cash flow with Rolls and its liquidity capability, which has been relegated to the forefront with the outbreaks of omicron.

AB Foods stated last month that it expects “significant progress” in the adjusted operating profit group and adjusted earnings per share, as Primark recovers strongly.

Friday’s AGM will focus on whether recent supply chain problems have caused the group to drift off course.

Omicron will again play a role here with a prediction it would recover an estimated £2bn in sales lost to store closings last year, dependent on the removal of COVID-19 restrictions.

The UK’s October gross domestic product data should indicate that the economy is still in bounce-back mode. Economists expect year-on-year growth to be 5.2%, down 5.3% from the previous month.

After October’s 0.6% increase, the monthly increase is expected at 0.5%.

After falling 0.4% in September, industrial production is expected to increase 0.2%.

Even if he/she/it isn’t completely out, there is evidence of an imminent bottle exit with the core US inflation rate at 4.6% in October and rising to 4.7% in November.

Month-on-month growth is expected to be 0.8%. This is slightly lower than October’s 0.6% increase.

Stock Market Announcements expected

Monday 6 December

Finals -Victrex PLC (LSE:VCT)

Interims- Fusion Antibodies PLC (AIM:FAB)

AGMs- Amur Minerals Corporation, Bellway PLC, Emmerson PLC, PipeHawk PLC, Virgin Wines UK PLC

Economic announcements- PMI Construction (UK)

Tuesday 7 December

Finals- CareTech Holdings, Hyve Group plc, IXICO plc, Paragon Banking Group PLC, Renew Holdings (AIM:RNWH), Tritax Eurobox PLC

Interims- Babcock International (LSE:BAB), iomart Group, Kinovo PLC, Mercia Asset Management PLC (AIM:MERC), SDI Group Plc, Solid State PLC (AIM:SOLI), Supreme PLC (AIM:SUP), Vianet Group (AIM:VNET) PLC, WH Ireland Group PLC (AIM:WHI)

AGMs- Amedeo Air Four Plus Ltd, Applied Graphene Materials PLC (AIM:AGM, OTCQX:APGMF), Falanx Group Ltd, IMC Exploration

Trading announcement – Ferguson PLC (LSE:FERG), British American Tobacco PLC (LSE:BATS)

Group plc, Schroder Japan Growth Fund plc, Scottish Oriental Smaller Cos Trust, YouGov Plc

Economic announcements- Retail Sales (UK), Halifax House Price Index (UK), Consumer Credit (US)

Wednesday 8 December

Finals – Hardide PLC, SSP Group plc (LSE:SSPG), TUI AG (LSE:TUI)

Interims- Berkeley Group Holdings PLC, Ince Group PLC, Quiz PLC (AIM:QUIZ), Stagecoach PLC

Trading announcements- McColls Retail Group PLC

AGMs- Alternative Liquidity Fund Ltd, Ashoka India Equity Investment Trust PLC (LSE:AIE), Europa Oil & Gas Holdings, International Biotechnology Trust plc, Volta Finance Ltd

Economic announcements- MBA Mortgage application (US), Crude Oil Inventories (US)

Thursday 9 December

Finals- Finsbury Growth and Income Trust PLC, On The Beach Group PLC, Victorian Plumbing Group PLC (AIM:VIC)

Interims- Clipper Logistics plc, Dr Martens PLC (LSE:DOCS), DWF Group Ltd, FirstGroup (LSE:FGP) PLC, LendInvest plc, Moonpig Group Plc, DS Smith PLC, Watches of Switzerland Group plc

Trading announcements- Balfour Beatty plc (LSE:BBY), Rolls Royce Holdings PLC, S& U PLC

AGMs- Bioventix plc, BlackRock Greater Europe Investment Trust plc, Doric Nimrod Air One Ltd, Doric Nimrod Air Three Ltd, Doric Nimrod Air Two Ltd, Frontier IP Group PLC (LSE:IPO), Lok’n Store plc, Orchard Funding Group plc, Ridgecrest plc, Round Hill Music Royalty Fund, UK Mortgages Ltd, Westmount Energy

Economic announcements- RICS Housing Market Survey (UK), Continuing Claims (US), Initial Jobless Claims (US), Wholesales Inventories (US)

Friday 10 December

Finals- Nexus Infrastructure PLC

Interims- Frasers PLC, SDCL Energy Efficiency Income Trust PLC , Yellowcake PLC

AGMs- Associated British Foods PLC (LSE:ABF), UP Global Sourcing Holdings PLC (LSE:UPGS).

Economic announcements- Balance of Trade (UK), Gross Domestic Product (UK), Index of Services (UK), Industrial Production (UK), Manufacturing Production (UK), Consumer Price Index (US)


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