Tuesday preview: Analysts point to weak fourth quarter at BP

BP is expected to report a weak set of fourth quarter results on Tuesday amid lower oil prices.

The oil giant is forecast to announce earnings in the final three months of 2015 fell to $730m (£514m) from $2.2bn a year earlier.

For the full-year Deutsche Bank estimates the company will report a loss before tax of $3.1bn, compared to profit of $11.1bn the previous year.

BP is also expected to reiterate that capital expenditure will run at the lower end of its $17-$19bn guidance for this year and next and that it is looking to cut $6bn of cash operating expenditure by the end of 2017.

“Given management’s focus on cost and high-grading returns our view is that the shares overstate the risks, on DB deck at least, and continue to suggest material upside,” said Lucas Herrmann, research analyst at Deutsche Bank.

Herrmann said BP’s upstream business is likely to show losses in the US in the fourth quarter while the downstream division was probably affected by the lower margins.

The broker rated BP at ‘buy’ and gave it a target price of 445p.

“Assuming forward development costs of c$15/bbl, 0.5% of annual growth, $65/bbl oil from 2020 and a 9.4% WACC we see fair value at 445p, implying a fair dividend yield of c6%,” Herrman said.

Meanwhile, grocery delivery service Ocado Group reports its full-year results with the consensus forecast at earnings before interest, tax, depreciation and amortisation of £81m, up from £71.6m the previous year.

Ocado reported a 13% increase in retail sales growth in December, despite fierce competition in the supermarket sector.

“While this outturn was a touch light of the recent trend and our estimate (c.+15%), this largely reflected the impact of market moves in pricing, particularly in fresh food, on average basket value which fell -2.3% (-1.7% excl. destination sites),” said Numis analyst Andrew Wade.

“Notwithstanding the slower fourth quarter sales rate, we left our full year EBITDA estimate of £80.7m unchanged; this would represent year-on-year growth of 13% an impressive achievement given the challenges in the food retail market.”

Wade added that Ocado's Smart Platform represented the most “efficient” end-to-end grocery e-commerce solution for potential partners, both financially and from a customer service perspective.

Numis is “confident that Ocado will sign multiple agreements over the coming years”, Wade said.

Tuesday 02 February

INTERIMS
Aberforth Geared Income Trust, Alumasc Group, Mattioli Woods, NWF Group, BP

INTERIM DIVIDEND PAYMENT DATE
Johnson Matthey, Vianet Group, Workspace Group

FINALS
Low & Bonar, Ocado Group, St. Modwen Properties

ANNUAL REPORT
Aberforth Smaller Companies Trust

SPECIAL DIVIDEND PAYMENT DATE
Johnson Matthey

AGMS
Dewhurst, Dewhurst (Non-Voting), Ground Rents Income Fund, UDG Healthcare Public Limited Company

TRADING ANNOUNCEMENTS
UDG Healthcare Public Limited Company

FINAL DIVIDEND PAYMENT DATE
Baring Emerging Europe, JPMorgan Chinese Inv Trust