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RBS and Astrazeneca could provide big contrast on Thursday

Shares in Astra hit all-time highs in September after the FTSE 100-listed group reported updated results on the efficacy of Brilinta

Ferguson PLC -

Royal Bank of Scotland Group PLC (LON:RBS) is the first of the big British high street banks to provide its third-quarter update, with the rest of the sector following the week after.

Investors will be hoping this is the final fallout of the payment protection insurance (PPI) furore, where mis-selling charges will be closely eyed in the numbers, along with banks also facing further pressure on their net interest income and profit margins.

However, Deutsche Bank analysts said the key focus was likely to be on both the outlook for net interest margins (the difference between the interest income generated by a bank versus the amount paid out to lenders) and any newsflow surrounding the ongoing Brexit process.

Margin guidance remains important, says Deutsche, as RBS is "the most rate sensitive bank in UK". 

At RBS, where Alison Rose has been announced as the new CEO, the second quarter saw £1.3bn profits, much higher year-on-year and compared to the first quarter, flattered by the completion of the recent merger with Saudi bank Alawwal and a return to profit for NatWest Markets.

This led to an abundance of cash for the first half, enabling a generous special dividend, which is unlikely to be repeated while the Brexit circus rolls on.

Astra still a star

AstraZeneca PLC (LON:AZN) seems likely to remain a favourite among investors even if the pharma giant's third-quarter results aren't quite as good as the preceding numbers.

Shares hit all-time highs in September after the FTSE 100-listed group reported updated results on the efficacy of Brilinta, a drug for coronary artery disease and type-2 diabetes treatments.

The second quarter has a lot to live up to, as results were well ahead of analysts’ forecasts with product sales jumping 14% year-on-year to US$5.72bn and total revenue was up 13% to US$5.82bn.

There has been a steady stream of news from the Anglo-Swedish colossus in recent months, including on a COPD drug, ovarian cancer trials and an asthma pen, with regulatory progress for a breast cancer antibody the latest update in the past week.

The drugmaker’s shares are among the most followed by UK investors large and small, a transformation from its unloved status a few years ago as it battled the declining sales of older blockbusters that had lost their patents, with a dearth of new products coming through.

Those investors that stuck with chief executive Pascal Soriot, unlike a certain Mr Woodford, have enjoyed the fruits of their faith as lung cancer treatments Tagrisso sales surging and Lynparza making good progress, while dozens of trials in respiratory and cardiovascular health offering potential.

Analysts at Jefferies said Astra has “the most upcoming catalysts” among the European pharma sector from its Roxadustat, Lynparza and Imfinzi trials and regulatory applications, while also flagging its “impressive” earnings growth and saying the group is the “best positioned to benefit from China reforms”.

While Jeff feels the shares are a tad overvalued versus its £67 target price, Barclays has its eye on £82.

RPS looks Down Under

Business consultant RPS Group PLC (LON:RPS) is releasing a third quarter trading update on Thursday, where investors hope to see signs of improvement following disappointing half-year results.

Profit before tax plunged 34% year-on-year to £18.2mln due to the underutilisation of Australian staff and a slow start in North America.

The company anticipated a stronger performance in the second half, based on higher transport spend in Australia and two major defence contracts signed in July, assuming the markets remain favourable.

Conditions in the UK and Ireland are not likely to have alleviated either, having been said to be weighed down by political uncertainty as clients delay investment decisions.

Significant events on Thursday 24 October:

Finals: RDI Reit PLC (LON:RDI)

InterimsBraemar Shipping Services PLC (LON:BMS)

Trading statement: Astrazeneca PLC (LON:AZN), KAZ Minerals PLC (LON:KAZ), Royal Bank of Scotland Group PLC (LON:RBS), RPS Group PLC (LON:RPS)

AGMs: Aberforth Split Level Income Trust PLC (LON:ASIT), Alumasc Group (LON:ALU), Myanmar Investments International Ltd (LON:MIL), Renishaw plc (LON:RSW), South32 Ltd (LON:S32)

FTSE 100 ex-dividendsFerguson PLC (LON:FERG), Rolls-Royce Holdings PLC (LON:RR.), ITV PLC (LON:ITV)

Economic announcements: ECB policy decision, EU PMI data, US jobless claims, US capital goods orders, US PMI data

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