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Health on the agenda, although coronavirus is not something Glaxo's results are likely to address

Aside from Glaxo, first-half results will be eyed from housebuilders Barratt Developments and Redrow, with Vodafone to issue an update

GlaxoSmithKline PLC -

Health will be on the agenda on Wednesday, although coronavirus is not something that drugs giant GlaxoSmithKline PLC (LON:GSK) is likely to address in its full-year results, with the firm’s focus on other killer diseases.

Investors will be looking for news on Glaxo’s injectable HIV drug and the Shingrix vaccine for shingles, as well as comment about future dividends.

The launch of the former had to be delayed due to a late response letter by the US authorities, and analysts now expect a 2021 entry in the market.

Meanwhile, the supply of the latter is outstripping demand and analysts have noted a “moderate” boost in production.

On the negative side, sales for bronchitis treatment Advair are expected to fall sharply in 2019, with the product now off-patent and facing generic competition.

“To compensate for that, the company will be looking to show that its pipeline of new drugs is filling – it has 41 medicines and 17 vaccines in development, from Phase I to Phase III trials, and analysts will look for progress reports here and any new product filings,” according to AJ Bell’s Russ Mould.

The analyst consensus points to Glaxo reporting full-year earnings per share of 120p, around a 4% decline.

Housebuilders ahoy

It will also be a busy day for housebuilders, with Barratt Developments PLC (LON:BDEV) and Redrow plc (LON:RDW) to open the door on the sector’s latest half-year numbers, which come in the wake of a host of upbeat comments on the sector since the UK general election.

Generally, analysts have been predicting that the election will uncork a mass of pent up demand, with a rebound in buyer confidence expected to drive volumes, although any updates on pricing and costs will be examined amid concerns about affordability issues and profit margins.

At around £8bn, blue-chip Barratt is the second-largest player in the sector by market cap, helped by a 60%-plus increase in its share price last year.

The first-half performance and outlook for the coming year are expected to be reassuring, according to analysts at Citigroup even though they recently downgraded Barratt to a ‘neutral’ rating.

Profit before tax (PBT) should come in at £391mln, Citi reckons, as completion volumes grow 2.5% and average selling prices (ASPs) pick up 3% to produce revenues of £2.09bn and oodles more cash.

At FTSE 250-listed Redrow, the board flagged last year that results for 2020 will be more skewed to the second half due to the strong first half last time when it delivered a bumper crop of London apartments in one go, with the outlook for profit margins to decline 20-50 basis points.

Completions for Redrow in the past six months are expected by UBS to tumble 10.5% to around 2,657 units, with ASP dipping 1.4% to £319,000 to produce a 12% fall in half-year revenues to £853mln.

The Swiss bank expects a tightening in operating profit margins to 18.1% leading to PBT falling to £152mln from £185mln the prior year, but sees the dividend being nudged up to 10.7p compared to 10.0p last time.

Vodafone to dial up update

Back with the blue-chips, mobile phones giant Vodafone PLC (LON:VOD) is due to report on its third-quarter performance, with investors looking for updates on the recently troublesome overseas markets of Spain, South Africa, Italy and India.

In November’s second-quarter update, the telecoms giant revealed organic service revenue was up 0.4% in the first half of the year, returning to growth of 0.7% in the second quarter after a decline of 0.2% in the first.

Revenues were boosted by two months’ contribution from the €18.4bn acquisition of European cable businesses from Liberty Global, while a loss before tax of €1.9bn reflected a licence ruling from India’s Supreme Court against the local telecoms industry that means the Vodafone Idea joint venture is liable for “very substantial demands”.

New chief executive Nick Read said he expected to “build on” the return to top-line growth in the second half of the year in both Europe and Africa, saying a “fast start” had been made on integrating the Liberty cable businesses.

Vodafone’s gigantic debt pile of €48.1bn, swelled by the acquisition and purchases of mobile spectrum, will be under scrutiny, though it is being chipped away by asset sales in New Zealand, Malta and Egypt.

Another quarter of 0.7% organic service revenue growth is expected by the market.

Significant events expected on Wednesday:

Finals: GlaxoSmithKline PLC (LON:GSK), Smurfit Kappa Group plc (LON:SKG),

Interims: Barratt Developments PLC (LON:BDEV), Redrow plc (LON:RDW), Frontier Developments PLC (LON:FDEV)

Trading updates: Vodafone Group plc (LON:VOD), Domino’s Pizza Group PLC (LON:DOM), Grainger PLC (LON:GRI)

Economic data: UK services PMI, UK composite PMI, US ADP employment, US balance of trade, US services PMI, US composite PMI

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