ITV’s first half results look set to receive a boost from its hit reality TV show Love Island as it battles against a tough advertising market.
Love Island is expected to have lifted audience numbers over the period, with the reality show breaking records after attracting more than 6mln viewers earlier this month.
Still, the important thing is not viewers but how much advertisers are willing to pay to place their ads in front of those people.
“Advertising trends have been weak since the Brexit vote, with ITV’s advertising revenue down 7% last quarter, so some positive news would be welcomed,” said Hargreaves Lansdown.
The onus will be on the Studios business otherwise, which now makes up more than half of all revenues and should help to offset uncertainty in advertising.
Emerging markets and investment key for Unilever
Shareholders will also be looking for a strong performance from the group’s home care division, which sells the Domestos and Sunlight brands, as this was a key driver of growth in the first three months of the year.
The defensive nature of Unilever’s stock has been difficult to resist amid ongoing global economic uncertainty, with the share price having risen 22% since the start of the year.
The firm has also been given a boost from better sales in emerging markets and a higher dividend.
Looking forward, investors will be keeping an eye out for any news on investments in the company’s personal care business following recent comments by new boss Alan Jope.
Devil in the Vodafone detail
Ending the week will be a much anticipated trading update from Vodafone Group Plc (LON:VOD), fresh from receiving the green light for its massive acquisition of European cable assets from Liberty Global and not long after its dramatic dividend cut.
Since the start of last year, shares in the UK mobile telecoms titan have lost more than 44% as investors fretted about the dividend amid lacklustre sales growth due to troubles in Italy, Spain, South Africa and India, together with expensive mobile spectrum auctions and a €27bn debt pile.
Seeing value in the shares, analysts at several major banks have been pushing out bullish notes, with Barclays seeing “a clear value opportunity” and saying Friday’s update could be a catalysts to help “unlock the discount” to its punchy 200p price target if there is “hopefully no operational deterioration” in the first quarter of Vodafone’s financial year.
Berenberg sees “attractive” risk/reward ratio in the stock, eyeing a “virtuous circle of improving revenue trend and faster deleveraging to drive a re-rating of the equity and restore confidence in the rebased dividend”, though they don’t expect services revenues to return to growth until the third quarter of the financial year.
UBS expects the first quarter to see an improvement in Italy, weaker South Africa, Spain softer but close to bottoming out, while the UK and Germany see broadly sIMIlar trends to the prior quarter.
“While Q1 trends themselves may not be a notable catalyst, we see Vodafone as too cheap,” the Swiss bank said.
Vaccines to star again for GSK
Booming demand for GlaxoSmithKline PLC’s (LON:GSK) portfolio of vaccines sent profits soaring in the opening three months of 2019, and investors will be hoping that trend has continued when the drugmaker reports its second-quarter numbers on Wednesday.
Sales of injections such as Shingrix has helped to offset some of the generic competition facing old blockbuster drugs, such as Advair.
A rival to Advair received approval earlier this year, forcing GSK to trim its earnings guidance for this year. The market will be hoping there is no deterioration in this regard.
Elsewhere, sales in the HUV unit will also be a key focus and whether newer products such as Juluca and Dovato can offset losses from Tivicay and Triumeq.
Astra’s new cancer drugs in focus
The likes of Tagrisso, Lynparza and Imfinzi have all helped to offset the decline in sales of previous blockbuster drugs over the past year.
UBS expects Tagrisso to have racked up sales of US$707mln, while Lynparza and Imfinzi should hit US$252mln and US$338mln, respectively.
Investors will also be keeping an eye on cash flow after the first-quarter results revealed it had fallen into negative territory.
Performance in emerging markets, particularly China, where Astra has a lot of exposure, will be spied for signs of any top-line slowdown.
Marston’s hopes to toast continued sales
While the pub sector has been under pressure in recent times amid fears that Brexit uncertainty could lead to lower consumer spending, FTSE 250 publican Marston’s plc (LON:MARS) has seen a relatively good level of sales recently.
The relatively good weather conditions since the group’s interims in May raise hopes that trading has remained steady for both the group’s premium and drinks-led pubs when it reports a third quarter update on Wednesday.
Investors may also be looking for any comment on press rumours that the firm is looking to sell its Pitcher & Piano chain.
Switch to spirits cheers Diageo
Investors will also be looking for an update on the additional £600mln share buyback which was unveiled at the start of the year, which was made possible after the group netted US$550mln from the sale of 19 drinks brands in September to US-based Sazerac.
The shares have outperformed the FTSE 100 so far this year as the company has benefitted from a strong demand for spirits, especially in key emerging markets such as India.
The company could also be in line for a boon as recent research has shown consumers are beginning to switch from beer and lager to spirits such as gin and whiskey, of which Diageo has a strong offering.
The group said in May that it expected full year sales growth in the high single digits and an improvement in profit margins, so investors will be hopeful.
The market will also be keeping its eye out for any forecasts on the coming year and whether the share buybacks will continue.
Rightmove tackles housing market slowdown
Property website Rightmove PLC (LON:RMW) has been grappling with a slowdown in the housing market but is still expected to post stronger revenue for the first half.
UBS estimates revenue of £142mln for the first six months of fiscal year 2019, up 8% on the previous year, with average revenue per agent up 8.8% to £1,073. The investment bank predicts a 9.7% rise in diluted earnings per share to 9.5p.
However, the number of advertisers are expected to fall by 1% to 20,252 as homeowners delay selling amid Brexit uncertainty.
Looking ahead, UBS thinks Rightmove might struggle to accelerate ARPA growth in line with market forecast of 7-8% per year for 2018-28 given the weakness in the UK housing market.
IG revenues hit by regulatory clampdown
The company, which reports its results for the year to May on Tuesday, expects annual turnover to fall to £475mln from £569mln last year and operating profit to drop to £190mln from £281mln.
The group has said it will maintain the 43.2p per share annual dividend until its earnings allow it to resume progressive dividends.
In a strategy review in May, the IG said it expects to see growth resume after this year and will up spending by £30mln a year to take advantage of opportunities in new products and territories.
These new opportunities are forecast to generate an additional £100mln of revenue by 2022, with the core business to grow by 3-5% a year.
National Express outlook in focus
The company grew sales across its bus and rail divisions in the first quarter, although its largest unit of North America was helped by swings in the US dollar.
The division, which runs school buses and offers corporate transit services, was hit by school closures due to severe snow during the period, with a US$4.5mln incremental year-on-year profit impact, although a “sizeable proportion” of the lost schools days is expected to be made up within the rest of the first half of the year.
The company reports its results for the first half on Thursday with the focus on whether it remains on course to achieve its guidance for the year.
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Markets await guidance from ECB
The European Central Bank (ECB) is widely expected to change its forward guidance towards easing monetary policy at its meeting on Thursday.
Last month ECB president Mario Draghi said the central bank could launch a fresh expansion of its €2.6trn quantitative easing programme if the inflation outlook failed to improve.
Many economists expect the central bank to cut the deposit rate in September, a month before Draghi is due to step down, but do not see a relaunch of asset purchases this year.
ING Economics thinks the ECB may not wait until September for easing given recent weak eurozone data and the fact the US Federal Reserve is expected to cut rates at the end of this month.
“For next week’s meeting, the main question is whether the ECB can afford to wait six more weeks before delivering new monetary stimulus or whether it should surprise financial markets by frontloading new measures,” it said.
“In fact, traditional ECB watching argues in favour of compiling more data, waiting for the release of second quarter GDP in mid-August and the next ECB staff projections and only then taking a decision at the September meeting.
“ Draghi’s track record of over-delivering and trying to be ahead of the curve, however, could bring new ECB action at the ECB’s July meeting. It's a very close call, which will only be decided during the meeting next week.”
Significant announcements expected:
Monday July 22:
Finals: Tungsten Corp. (LON:TUNG)
Economic data: US Chicago Fed national activity index
Tuesday July 23:
Trading updates: Paragon Group PLC (LON:PAG)
AGMs: Stobart Group PLC (LON:STOB)
Economic data: CBI distributive trades survey; US existing home sales
Wednesday July 24:
Economic data: BBA UK mortgage lending figures; CBI industrial trends survey; US new home sales
Thursday July 25:
ECB rate decision
Interims: AstraZeneca PLC (LON:AZN), Unilever plc (LON:ULVR), RELX PLC (LON:REL), Robert Walters PLC (LON:RWA), National Express PLC (LON:NEX), Anglo American PLC (LON:AAL), Inchcape PLC (LON:INCH), Bodycote PLC (LON:BOY), Acacia Mining PLC (LON:ACA), Capital & Counties PLC (LON:CAPC), Howden Joinery PLC (LON:HWDN), Lancashire PLC (Q2) (LON:LRE), Morgan Advanced Materials plc (LON:MGAM), Tyman PLC (LON:TYMN), Vesuvius Plc (LON:VSVS), Primary Health Properties PLC (LON:PHP)
Trading updates: Compass Group PLC (LON:CPG), AJ Bell PLC (LON:AJB), Sage Group PLC (LON:SAGE), CMC Markets Group PLC (LON:CMCX), Daily Mail & General Trust PLC (LON:DMGT), Intermediate Capital PLC (LON:IOP)
Economic data: German IPO business climate report; US weekly jobless; US durable goods orders
Friday July 26:
Trading updates: Vodafone PLC (LON:VOD)
Economic data: US preliminary GDP