BT Group plc (LON:BT.A) and AstraZeneca PLC (LON:AZN) are likely to steal the show on Friday when the companies dish out their quarterly earnings.
Telecoms giant BT is expected to report third quarter underlying earnings (EBITDA) fell to £1.84bn from £1.87bn a year earlier, as the company continues to tackle rising costs.
The company’s network division, Openreach, is planning to build the UK’s ultrafast broadband network and hopes to claw back some of the costs through its customers.
But Ofcom is clamping down on the prices Openreach charges other telecoms providers for the service.
Analysts at Berenberg hence think the era of unconstrained price rises seems to be ending and this poses a risk to consumer revenues.
READ: BT facing regulatory hurdles and uncertainty over costs, says Berenberg
The broker also recognised that BT’s triennial pension review to plug its deficit is ongoing.
But the risks related to the fibre to the premises (FTTP) upgrade and the pension review are already priced into the shares, Berenberg said.
Berenberg is also “less worried” about the threat to losing its Premier League broadcasting rights in the next bidding round in February.
Numis believes the market estimate for third quarter EBTIDA is “too bearish” and predicts a figure closer in line with the previous year at £1.86bn.
READ: BT to report drop in third quarter earnings as Premier League rights auction looms
“Fibre growth prospects remain good: at the end of the second quarter, 57% of all BT retail broadband customers took fibre (+8 percentage points year-on-year) but that number was just 30% (+10 percentage points year-on-year) for all of BT's retail rivals reselling Openreach.”
Tide may turn for AstraZenca
Meanwhile, drugmaker AstraZeneca may report flat fourth quarter sales, according to Deutsche Bank’s estimates.
The company’s product sales have fallen in recent years due to the loss of patents on its Crestor (statin) and Seroquel (bipolar) blockbuster drugs but the bottom of the cycle may finally be in sight.
Deutsche Bank said the final quarter will be supported by easing pressures from generic competition and strong growth from its new cancer treatments, Lynparza and Tagrisso.
Lynparza and Tagrisso will bring in at least US$425mln in the quarter, the bank estimates.
The diabetes and respiratory divisions are expected to remain mixed, but Astra’s Brilinta heart attack treatment should show solid growth with sales expected to rise 32% to US$302mln.
“We expect the shares to be driven by improving visibility on product sales growth momentum which we expect to translate to a meaningful margin expansion and above peer group growth over the medium term,” Deutsche Bank analyst Richard Parkes wrote.
US jobs data
Away from corporate news, it’s that time again for the all-important official monthly US jobs data.
Economists expect the US non-farm payrolls report to show employers added 180,000 jobs in January, compared to 148,000 a month earlier.
The unemployment rate is forecast to remain unchanged at 4.1% while average hourly earnings are projected to rise 0.3% month-on-month and 2.6% year-on-year.
The Federal Reserve will be keeping tabs on the data since the health of the labour market is a key factor in deciding when to next raise interest rates.
Significant announcements due
Interims: BT Group plc (Q3) (LON:BT.A)
Finals: AstraZeneca PLC (Q4) (LON:AZN)
Trading update: Gem Diamonds Limited (LON:GEMD)
Economic data: UK construction PMI; US jobs data; US factory orders; US consumer sentiment