Tuesday preview: Prudential offers potential to surprise
(ShareCast News) - Most of the market major action is expected later in the week, although depending on votes in parliament, Tuesday could be the day that Theresa May fires the trigger on Article 50 to begin the Brexit negotiation process.
Outside of political manoeuvring and some second-line macroeconomic data, the market will have little to amuse itself apart from corporate results, with Antofagasta, Close Brothers, Prudential, TP Icap, and SIG all reporting, while well followed Ocado delivers a first-quarter trading update.
Last month, with major UK life assurers' shares having underperformed so far in 2017, Deutsche Bank analysts said last year was one to forget for the sector, though improving bond yields have boosted solvency ratios.
The muted performance so far this year can mostly be blamed on stock-specific headwinds, some Brexit fears and a perception that banks offer better gearing to a recovery.
"We believe nonetheless that the results offer a chance for management to rebut some of the perceived headwinds and showcase a better outlook for 2017," Deutsche they said, with Prudential their top pick and offering the potential to surprise positively both on the dividend front and in its UK annuity book. The shares have risen 25% in the past six months.
Consensus operating profit is £4.1bn, with a dividend per share of 41.6p.
UBS said key risks were a 'noisy' US result and potential weaker sales in Asia, but if the company delivers a clean set of numbers it should be perceived positively, especially if accompanied with a special dividend like the 10p announced a year ago or a step change in dividend.
Given the strong rise in US interest rates, UBS expects some of the negative movements in the first half to reverse in the second, while any improvement in Asian growth would be a positive.
Antofagasta faces challenges from grade decline and ore hardness issues, but UBS said as the market is becoming increasingly aware of these challenges it has reduced the risk of negative news in the results, where the consensus forecast is for EBITDA of $1.60bn.
UBS said it hoped management would provide more clarity on costs reduction and productivity plans, plus more detail on the acquisition of Zaldivar.
On Ocado, which in January reported fourth quarter retail sales growth of +13.1%, which was driven by significant progress in orders per week but partly mitigated by a continuing decline in average order size.
"We expect to see these trends - solid order growth offset by basket declines from price investment and increased penetration of Smart Pass - continue into Q1, and look for Retail sales growth of +13.0%," said Numis.
For SIG, after a torrid second half which saw a profit warning due to UK gross margin pressures, investors will be focused on
whether the competitive environment has improved and perhaps on who the new CEO might be.
Tuesday 14 March
Blancco Technology Group, Close Brothers Group, Eagle Eye Solutions Group, Kalibrate Technologies, Pantheon Resources
Antofagasta, Advanced Medical Solutions Group, Antofagasta, Applegreen, Bango, Brady, Burford Capital , Crossrider , French Connection Group, Gresham Technologies, InterQuest Group, Midwich Group, Prudential, SIG, Stadium Group, STM Group, Surgical Innovations Group, The Gym Group, TP ICAP, Zotefoams
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Price Index (GER) (07:00)
Industrial Production (EU) (10:00)
Producer Price Index (US) (13:30)
Crossrider , SEGRO
Commercial International Bank (Egypt) SAE GDR (Reg S), LPA Group