BT, airlines and oilers among blue-chip bonanza in coming week

There will also be eyes on the macro diary as markets await the latest interest rates decision from the Federal Reserve

BT Group PLC -

The coming week is set to see a bonanza of results and updates from some of the LSE’s major blue-chip stocks including major oilers BP and Shell, telecoms firm BT, airlines Ryanair, Wizz Air and BA owner IAG.

Also in focus will be the FTSE 100’s drug giants GSK and AstraZeneca (LSE:AZN), tobacco firm BAT and another batch of earnings from the large US corporates.

Meanwhile, the macro calendar will be in focus on Wednesday when the Federal Reserve makes its latest decision on interest rates.

Budget airlines descend with trading updates

Things looked to be getting better for the airline industry until the Delta variant of COVID-19 muddied the picture. Passenger numbers have picked up but shilly-shallying over travel restrictions has made it difficult for holidaymakers to book flights with confidence in the summer holiday season.

For Ryanair Holdings PLC (LSE:RYA), which will deliver a trading update on Monday, predicting quarterly revenue of €420mln, up from €125mln in the same quarter of last year and ahead of the consensus forecast of €376mln.

Earnings before interest and tax (EBIT) are expected to be negative, with UBS going for a loss of €257mln versus the market’s prediction of a loss of €283mln.

Meanwhile, UBS is forecasting fiscal first-quarter revenues of around €225mln for Wizz Air Holdings (AIM:WIZZ) PLC when it updates on Wednesday, up from €91mln a year earlier and well above the consensus forecast of €189mln.

UBS’s forecast is based on the assumption that traffic levels will be at least more than 25% of pre-pandemic levels in the same quarter of 2019.

Games Workshop to (war)hammer home profit jump

Warhammer maker Games Workshop Group PLC (LSE:GAW) will release its final results on Tuesday in what is expected to be a positive affair following the company’s upbeat trading update in May.

The company said previously that its profits for the year to end May 2021 will be more than £150mln, a rise of almost 70% on the previous year, while revenues are expected to be not less than £350mln, up from £270mln in 2019.

Investors are also heading for a heft payday, with the company’s total dividend for the year due to hit 235p per share compared to 145p the year before.

With the figures for the year expected to be bumper ones, the key point of interest is likely to be the firm’s outlook statement and whether its strong growth run could be side-tracked by the reopening of the economy and easing of lockdown restrictions, meaning people are less likely to be staying at home playing and painting Warhammer figurines.

Blue-chip banks in focus

Bank results season is upon us and most of the lenders should be chipper now that the banking authorities have taken off the limiter on dividend payments.

As per usual, the banks have also taken pity on the City by spreading their results announcements out, starting with Barclays on Wednesday.

UBS is forecasting second-quarter adjusted profit before tax of £1.8bn “in a result in which capital market revenues, loan loss overlay write-backs and restructuring charges will likely distort headline numbers”.

UBS is predicting the CET1 ratio – a measure of balance sheet strength – will be 14.4%, including the exclusion of capitalised software intangibles.

Retail investors’ favourite Lloyds Banking Group (LSE:LLOY) PLC is expected to post a second-quarter adjusted profit before tax of £1.45bn and a CET1 of 16.6%.

In the past, the company has been a favourite of income investors and shareholders would probably like at least a nod and a wink as to how high the dividend is likely to be and how soon Lloyds can return to the ranks of the FTSE 100’s top dividend payers but it has been suggested that with Charlie Nunn not having been in the chief executive’s role for long he will be reluctant to change too much too soon.

NatWest Group (LSE:NWG) PLC is also issuing second-quarter results and the expectation is for adjusted profit before tax of some £935mln and CET1 of 18.1%.

The government recently indicated it would sell off another chunk of shares in the nationalised bank, which could either mean things are going well or the government is cashing in while it can.

Given the strength of the housing market and the relatively low level (so far) of loan defaults, it is probably more a case of the former.

BAT hopes to spark interest with results

Lucky Strike and Pall Mall owner British American Tobacco PLC (LSE:BATS) reports its half-year results on Wednesday, with the number likely to be highly anticipated by investors after the firm's better than expected trading update in June.

Despite the increasing pressure on the tobacco industry from regulators and a somewhat lukewarm take-up of next-generation products (NGPs), BAT has managed to keep growing its dividend and pay down its debts. It has also seen sales accelerate of its own NGPs, namely its Vuse, Vype and glo brands.

The firm’s CEO Jack Bowles has also flagged up improving cigarette volumes in emerging markets and better market share in developed jurisdictions, so shareholders will be hoping these trends continue into the rest of the year and beyond.

In the numbers themselves, consensus is expecting first-half sales of £12bn, down from £12.2bn a year ago, and an adjusted operating profit of £5.2bn compared to £5.4bn last year.

A dividend of 53.9p will also be expected, in keeping with the group’s strategy of paying 215.6p per share in dividends and distributing around two-thirds of its profits.

Shell to be confirmed most profitable major

Like BP, Royal Dutch Shell (LSE:RDSA) Plc is also doing lots of talking and planning around its ‘transition’.

At the same time, it is arguably positioned best to capitalise on recently strong oil prices.

Indeed, in a preview note, UBS called it the “most profitable of the majors”.

UBS - which rates Shell as a ‘buy’ with a 1,860p - expects the oiler to report US$5.5bn of net income which would mark a 28% improvement quarter-on-quarter.

“We expect Shell to retain its position as the most profitable of the majors,” the Swiss bank said in the note. “Whether it is also the most cash generative is likely to be dependent on the level of working capital build this quarter but we fully expect underlying CFFO generation to be the best as well.”

BT calls in with update

BT Group PLC (LSE:BT.A) (LON:BT.A) is due to deliver a trading update on Thursday as investors keep a wary eye on the telecom giant’s operating trends amid the pressures of the pandemic, competition and regulatory changes.

For the first quarter, analysts at UBS are expecting some improvement for the firm as the effects of the pandemic reduce, although they added that revenues are likely to remain under pressure.

Despite this, analysts said they expected earnings to be helped by cost savings and accounting effects, predicting earnings (EBITDA) of £1.8bn for the quarter and revenues of £5.15bn.

Can the gap widen between FTSE's drug giants?

GlaxoSmithKline PLC (LSE:GSK) on Wednesday and AstraZeneca PLC (LSE:AZN) on Thursday are due to release their first-half results.

GSK’s numbers follow last month’s big strategy rejig, where under-pressure boss Emma Walmsley as well as adding some details on the planned demerger next year of GSK Consumer Healthcare, unveiled new goals including lifting sales 5% a year on over the next decade, ramping up operating profit margins above 30% from the current mid-20s, and generating £10bn of cash generation over the next five years.

The dividend will be a “sacrificial victim”, in the words of financial analyst Danni Hewson at AJ Bell, as it is expected to drop to 80p a share in 2022 from the company in its current guise to 55p a share across ‘New’ GSK and ‘New’ Consumer Healthcare.

For the half-year, investors and analysts will be focusing on any changes to current guidance for an EPS decline of the current year of a “mid-to-high single-digit percentage”, plus developments in the key areas of vaccines (after missing out on the big Covid one) and speciality medicines, plus infectious diseases, HIV, oncology and immunology/respiratory, with a drug pipeline that currently contains 20 vaccines and 42 medicines. 

AstraZeneca, its more successful rival in recent years with a £40bn-plus market cap gap over its former superior, is sure to update full-year guidance after recently completing its acquisition of Alexion, with analysts at UBS expecting around 40 US cents to current EPS guidance of US$4.75-5.00.

“It is possible the guidance range will be wider,” the UBS analysts added, though they do not expect a hidden deteriorating outlook.

“Top-line momentum remains key for investors as well as its growth drivers: Tagrisso, Lynparza and Imfinzi. Calquence uptake will also be of interest especially after we saw the topline data of the head-to-head trial with Imbruvica.”

Investors will also be looking for comment on further Covid-19 impact and the group’s China business given the China volume-based procurement (VBP) and Beijing’s National Reimbursement Drug List (NRDL) hit sales for a number of drugs in the first quarter.

BA owner IAG hopes for recovery after turbulent year

Half-year results from British Airways owner International Consolidated Airlines Group (LSE:IAG) SA are unlikely to make for great reading as coronavirus travel restrictions continue to be a millstone around the neck of the travel industry.

However, investors will likely be hoping the easing of restrictions, albeit slightly, will lift the firm’s fortunes across the rest of the year, so the outlook statement will therefore be crucial as well as the group’s ongoing cost management.

With this in mind, analysts at UBS are predicting the focus to be on forward bookings and the impact of the UK’s traffic light system, as well as on the current rate of cash burn.

Macro matters

The week’s key macro focus is going to be on the Fed meeting along with US GDP on Thursday and PCE indices on Friday, plus a range of other US data that could move the market.

The Federal Open Market Committee (FOMC), the rate-setting body of the US central bank, meets on Wednesday,

“The FOMC is bound to discuss the appropriate timing for tapering down their $120bn-a-month bond purchases, but they’re not likely to be in any rush to make a decision, IMHO,” says market analyst Marshall Gittler at BDSwiss.

At their last meeting on June 16, the Fed committee determined that reaching the standard of "substantial further progress" was still some way off, but that they expect progress to continue.

Since then, June jobs numbers were “good but not great”, but inflation is well over the 2% target, so Gittler wondered if the FOMC can still have confidence in their view that inflation is “transitory”.

While an optimistic outlook on the US economy can be expected, Gittler added.

“They are however likely to remain cautious because of the alarming spread of the delta variant of the virus. One hopes though that with most of the vulnerable over-60s cohort vaccinated, hospitalizations and deaths won’t rise at anything near the increase in new cases and the US can continue to open up. This is one of the main reasons why I think the ‘let’s wait’ crowd is likely to prevail.”

Big week for US earnings as Tesla, Apple, Amazon etc report

After Monday’s closing bell it’s Tesla results time, with Hasbro (NASDAQ:HAS) another well-known name on the day.

Things heat up on Tuesday as the US$2trn companies in Apple Inc (NASDAQ:AAPL) and Microsoft Corp both report after the bell, along with close-behind Alphabet Inc (NASDAQ:GOOG), the owner of Google. There are also a number of big names reporting across various sectors including McDonald’s Corp, Starbucks (NASDAQ:SBUX) Corp, Texas Instruments Inc (NYSE:TXN), 3M and Lockheed Martin (NYSE:LMT).

On Wednesday it’s billion-dollar Facebook Inc (NASDAQ:FB), along with Visa (NYSE:V) Inc, Pfizer (NYSE:PFE) Inc, Qualcomm, Boeing, Advanced Micro Devices Inc and Ford Motor Co.

Thursday brings Amazon.com Inc and Mastercard (NYSE:MA), Comcast (NASDAQ:CMCSA), Intel, Altria, Newmont Mining, KKR and Hershey.

The Wall Street week finishes with Warren Buffett’s Berkshire Hathaway (NYSE:BRK) Inc, together with big names including Procter & Gamble (NYSE:PG) Co, ExxonMobil Corp, Caterpillar, Chevron and Pinterest.

Starting with Tesla, recent production numbers came in ahead of expectations, showing Tesla navigated the computer-chip shortages that have hit the wider industry well. However, tighter supply chains, a changing product mix and increasing competition in the electric car market will also “spark extra interest in any comments on the outlook for future deliveries – particularly in China where local competitors have been ramping up sales”, says analyst Nick Hyett at Hargreaves Lansdown.

For Microsoft, analysts at broker Wedbush is expecting a robust performance from its Azure cloud product: “We expect another ‘beat and raise’ special from Redmond with Azure growth numbers (45%+ YoY) that exceed whisper expectations and headline numbers that comfortably exceed the Street's $44bn and $1.90 estimate.”

As for Apple, where the Street is looking for US$73bn revenues and US$1.00 of earnings, Wedbush says both measures “look likely conservative given the underlying iPhone strength we saw during the quarter with a particular uptick in demand out of China”. The big deal is the iPhone 13 launch expected in September, where supply chain checks put iPhone production at 130-150mln units and “this positive outlook gives us enhanced confidence that 2021's launch timing will be “normal’,” said analyst Dan Ives.

Looking at Alphabet, investors will be looking for the Mountain View search behemoth to show continued momentum in its Google search and advertising products, plus signs of the cloud division becoming a contender against the runaway market leaders of Amazon Web Services and Microsoft Azure.

As for Facebook, it has been a pandemic winner and as a result the group will have a hard time besting its 2020 first-half results, says analyst Laura Hoy at Hargreaves, with monthly active users up 10% last quarter, but likely to be a bit lower as people are out and about a bit more. “However, nothing seems impossible for the social media giant and the world’s shift to digital looks like a long-term behavioural change rather than a passing fad.”

Significant announcements expected for week ending 30 July:

Monday July 26:

Trading announcements: Ryanair Holdings Limited, Cranswick PLC (LSE:CWK)

Interims: Science Group PLC (AIM:SAG)

Tuesday July 27:

Trading announcements: BP PLC (LSE:BP.), Virgin Money UK PLC (LSE:VMUK), Mitie Group (LSE:MTO) PLC, Greencore Group (LSE:GNC) PLC

Finals: Games Workshop Group PLC (LSE:GAW), Moonpig Group PLC (LSE:MOON), Cohort PLC (AIM:CHRT), Foresight Group Holdings Limited, In The Style (AIM:ITS, FRA:8DH) Group PLC

Interims: Reach PLC (LSE:RCH), Croda International PLC (LSE:CRDA), Reckitt Benckiser Group PLC (LSE:RB.), Ascential (LSE:ASCL) PLC, Capital & Counties (LSE:CAPC) Properties PLC, International Personal Finance (LSE:IPF) PLC, Kitwave Group PLC (AIM:KITW), Restore Plc (AIM:RST), Sabre Insurance Group PLC (LSE:SBRE), Unite Group (LSE:UTG) PLC, Vivo Energy PLC (LSE:VVO)

Economic data: US durable goods orders, US house prices

Wednesday July 28:

Trading announcements: GlaxoSmithKline PLC (LSE:GSK), Wizz Air Holdings (AIM:WIZZ) PLC, Lancashire Holdings Ltd

Finals: Hargreaves Services Plc (AIM:HSP, OTC:HGRVF), Shearwater Group PLC (AIM:SWG)

Interims: Barclays PLC (LSE:BARC), British American Tobacco PLC (LSE:BATS), ITV PLC (LSE:ITV), Aston Martin Lagonda Global Holdings PLC (LSE:AML), Rio Tinto PLC (LSE:RIO), Smurfit Kappa Group plc (LSE:SKG), St James’s Place PLC, Aptitude Software Group PLC, Conduit Holdings Ltd (LSE:CRE), Hutchmed (China) Limited, MusicMagpie PLC, Primary Health Properties PLC (LSE:PHP, FRA:PP51), Quartix Technologies PLC, Rathbone Bros PLC, Foxtons (LSE:FOXT) Group PLC, Card Factory (LSE:CARD) PLC, Dignity (LSE:DTY) PLC

Economic data: Fed rates decision, US trade balance

Thursday July 29:

Trading announcements: Royal Dutch Shell (NYSE:RDS.A) PLC, BT Group PLC (LSE:BT.A), Airtel Africa PLC (LSE:AAF), Compass Group (LSE:CPG) PLC, discoverIE Group PLC, Evraz PLC (LSE:EVR), Headlam Group (LSE:HEAD) PLC, Intermediate Capital Group (LSE:ICP) PLC, Sage Group PLC, Johnson Matthey PLC (LSE:JMAT)

Finals: Amigo Holdings PLC (LSE:AMGO), SRT Marine Systems PLC (LSE:SRT)

Interims: Lloyds Banking Group PLC (LSE:LLOY), AstraZeneca PLC, Anglo American PLC (LSE:AAL), BAE Systems (LSE:BA.) PLC, Diageo PLC (LSE:DGE), SEGRO PLC, National Express (LSE:NEX) Group PLC, Rentokil Initial (LSE:RTO) PLC, Devro (LSE:DVO) PLC, Elementis plc (LSE:ELM), Equiniti (LSE:EQN) Group PLC, Inchcape (LSE:INCH) PLC, Indivior PLC (LSE:INDV), Informa PLC (LSE:INF), Relx PLC, Schroders (LSE:SDR) PLC, Smith & Nephew PLC (LSE:SN), Spectris PLC (LSE:SXS), Totally PLC (AIM:TLY), Vesuvius Plc (LSE:VSVS)

FTSE 100 ex-dividends to knock 2.57 points off the index: Royal Mail PLC (LSE:RMG), SSE PLC (LSE:SSE)

Economic data: US GDP, US jobless claims

Friday July 30:

Trading announcements: Paragon Banking Group PLC (LSE:PAG), Yamana Gold (TSX:YRI) Inc, Kerry Group PLC

Finals: Victoria PLC (AIM:VCP)

Interims: NatWest Group PLC (LSE:NWG), International Consolidated Airlines Group (LSE:IAG) SA, Rightmove PLC (LSE:RMV), Pearson PLC (LSE:PSON), Essentra PLC (LSE:ESNT), IMI PLC (LSE:IMI), Intertek Group (LSE:ITRK) PLC, Jupiter Fund Management PLC (LSE:JUP), Man Group (LSE:EMG) PLC

Economic data: US personal incomes, US inflation expectations

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