Wednesday preview: BATs, Autonomy, ITV ...

26th Jul 2011 17:35

Like an addicted smoker stubbing out one cigarette and going straight on to another, the market is bracing itself for interim results from tobacco giant British American Tobacco (BATs) just one day after its perennial rival, IMPs, issued a so-so trading update.Broker Charles Stanley thinks the Lucky Strike cigarettes maker will announce an improvement in adjusted operating profit to £2.67bn from £2.46bn at the interim stage last year. Earnings per share (EPS) are tipped to rise to 95p from 87.1p, and the dividend is seen climbing to 38.1p from last year's interim dividend of 33.2p."Interim results from BAT are expected to be reassuring with higher prices more than offsetting any volume weakness," Charles Stanley's Tina Cook suggests. "Industry volumes are expected to remain under pressure in 2011 (c2.5% decline), but BATs expects to perform slightly better and continue to grow share. We anticipate a marginally lower rate of volume decline than the -2.4% seen in Q1 [first quarter]. The market will be looking for evidence that pricing discipline remains intact following a price war in Spain, which triggered earnings downgrades, particularly for rival IMT [IMPs] ... The situation has started to stabilize on the back of recent price rises," Cook noted.The broker thinks the key focus of Wednesday's results will be margin improvement, and the company's progress towards a 35% margin by 2012. A new margin target will be announced if this is achieved ahead of schedule, the broker said. Computer chip makers have had a mixed time of it recently, with Scottish outfit Wolfson and French firm ST Microelectronics both lowering growth projections, while ARM continues to go from strength to strength. Irish Bluetooth chip specialist CSR has had a few problems of its own this year, as it posted lower first quarter revenues, so the second quarter trading update is likely to be keenly anticipated.Stockbroker Matrix is expecting the company to announce revenues of $196m, ahead of the company's guidance of $192.5m and market consensus of $190m. It predicts earnings before interest and tax of $20m, way above market consensus of $15m."Revenues will be impacted by weakness at [Blackberry maker] RIMM [Research In Motion] and Nokia which jointly represent c15% of revenues. This will be offset by strength at Samsung, owing to the success of the Galaxy S2 smartphone, for which CSR supplies the GPS SiRFstarIV chip," Matrix suggested."With headwinds in wireless and Nokia/RIMM continuing to lose significant market share, we think Q3 2011 guidance could be muted. This may be offset by capacity constraints being lifted in the automotive segment and the continued success of SiRFstarIV," the broker continued.Sticking with the tech sector, Autonomy, the Cambridge-based company that describes its business as providing "meaning-based computing" - whatever that means - is set to update the market on its second quarter trading. Panmure Gordon thinks the numbers will be in line with consensus estimates and, consistent with some upbeat statements from the US technology sector, the outlook statement should be upbeat."We anticipate revenue of $254.1m from $221.1m YOY [year-on-year] - we understand that consensus is $249.2m," Panmure Gordon said. The broker thinks earnings before interest, tax, depreciation and amortisation (EBITDA) will rise to $120.5m from $111.4m the year before. Peel Hunt, however, is a glass half-empty kind of a broker, at least when it comes to Autonomy, saying "earnings appear to have stalled". It expects second quarter earnings per share of 29 cents, or 2.5 cents below the consensus prior to the company's deal with Iron Mountain, which concluded early and is expected to chip in with sales of around $8m in the second quarter."If second quarter earnings come in at 28¢, this would equate to 112¢ on a latest 12 months basis. This would be exactly the same as the 12 months ended June 2010 if we were to add back the $20m of one-off marketing costs in Q3 2009. This lack of earnings growth owes something to an underlying slowdown in sales growth, but even more concerning has been the dramatic increase in the cost base. Sales and marketing costs in particular have risen at an alarming rate over the last 12 months," Peel Hunt argues. Terrestrial broadcaster ITV has been in the shadow of British Sky Broadcasting in recent weeks, thanks to the furore surrounding the aborted News International bid for Sky. Wednesday will see ITV get its spell in the sun - BskyB reports on Friday - and broker Charles Stanley is expecting half-year revenue to top the billion mark, at £1,005m, up from £987m last year. The broker predicts earnings before interest, tax and amortisation of £225m, up from £165m the year before, and profit before tax of £185m, up from £118m. If Charles Stanley is correct, the earnings per share will be 3.6p, up from 2.2p, and there will even be a dividend payment of 0.3p (2010: nil).Broadcasting & Online is forecast to report a 52% increase in operating profit to £185m, while the broker has pencilled in unchanged operating profit of £43m for ITV Studios. "Trading conditions in the international TV production market remain tough, with broadcasters attempting to reduce risk by increasingly only commissioning programme formats with a proven track record. ITV Studios' recent poor track record in creating successful new formats, means it is particularly vulnerable to this trend," Charles Stanley's Sam Hart says."An update on the five year Transformation Plan is anticipated from Chief Executive, Adam Crozier. Key priorities include reducing dependence on advertising revenues, better exploiting itv.com and strengthening ITV Studios. Most initiatives remain at the implementation stage," Hart added.INTERIMSAccess Intelligence, Autonomy Corporation, British American Tobacco, CSR, Dignity, ITV, Lancashire Holdings, Morgan Crucible Co, Provident Financial, Rathbone Brothers, Telekomunikacja Polska GDR (Reg S), Virgin Media Inc.INTERIM EX-DIVIDEND DATEBritish Portfolio Trust, Fenner, Ludgate Environmental Fund Ltd., Matrix European Real Estate Inv Trust Ltd., MicrogenQUARTERLY PAYMENT DATEDow Chemical CoQUARTERLY EX-DIVIDEND DATECity of London Inv Trust, Premier Energy & Water TrustINTERNATIONAL ECONOMIC ANNOUNCEMENTSM3 Money Supply (EU) (09:00)Consumer Prices (GER)Import Prices (GER)MBA Mortgage Applications (US) (12:00)Durable Goods Orders (US) (13:30)Crude Oil Inventories (US) (15:30)Beige Book Fed Survey (US) (19:00)Q2Autonomy Corporation, CSR, Lancashire Holdings, Virgin Media Inc.GMSAstaire Group, Promethean WorldFINALSAvisen, Renishaw, Scientific Digital ImagingIMSSBrewin Dolphin Holdings, Marston's, Sage Group, Titon HoldingsSPECIAL EX-DIVIDEND PAYMENT DATESt Peter Port Capital Ltd.AGMSAPI Group, Argo Real Estate Opportunities Fund, Blacks Leisure Group, Carphone Warehouse Group, E2V Technologies, Evolve Capital, Ncondezi Coal Co Ltd. (DI), Northumbrian Water Finance 6% Gtd Bds 11/10/17 £ (VAR)(BR), Subex Ltd. GDR (Reg S), Synergy Health, Tinci Holdings Ltd. (DI), TyraTech Inc. (Reg S), Vedanta Resources, Ventus 2 VCT, Ventus VCT, Ventus VCT 'C' SharesTRADING ANNOUNCEMENTSCarphone Warehouse GroupUK ECONOMIC ANNOUNCEMENTSCBI Industrial Trends Surveys (11:00)FINAL DIVIDEND PAYMENT DATEBraemar Shipping Services, Hargreave Hale AIM VCT 2, Martin Currie Pacific Trust, Rensburg AIM VCT, Templeton Emerging Markets Inv TrustFINAL EX-DIVIDEND DATEHeath (Samuel) & Sons, Investec, London Stock Exchange Group, Scottish & Southern Energy, St Peter Port Capital Ltd., Volex GroupQ1Gail (India) Ltd. GDR (Reg S)--jh