Market Report: Centrica feels chill from customer drift
Monday 13 May 2013
Rising gas and electric bills are making energy providers extremely unpopular. There is outcry over the bonuses paid to its executives and now British Gas has even become unpopular with its shareholders. Its owner, Centrica, will update the market today. Analysts think it will admit it has been hit by business and home customers looking elsewhere for better deals to reduce their ever-increasing bills.
Credit Suisse reckons "ongoing weak high street conditions and fiscal austerity" will mean further strain. Earlier this month it slashed its rating to underperform, from neutral. It thinks the stock looks expensive compared with peers, trading on 12.8 times 2014 earnings. It recommends short-selling Centrica over the next three months, and cuts the price target to 320p.
Results/Updates: Blinkx, Centrica, Diploma, DRS Data & Research, Dignity, Glencore, Interserve, Johnston Press, Planet Payment, Treatt, Lonmin, Velti.
Supplying the Ministry of Defence with spare parts has served engineering outsourcer Babcock International well. This year it said its bid pipeline had swollen to £15.5bn, and its final results tomorrow are expected to be strong. Some analysts even think this pipeline is valued too conservatively. But Panmure Gordon's Mike Allen thinks that "for the share price to advance further" there needs to be delivery on earnings upgrades, so he retains his hold rating for now. Analysts at Espirito Santo expect adjusted pre-tax profit to rise 17 per cent in the year to the end of March 2013 to give profits of £319.6m and say the shares are fairly valued.
Results/Updates: APR Energy, Babcock International, Balfour Beatty, British Land, Braemar Shipping Services, Capita, DCC, Enterprise Inns, E Therapeutics, Icap, Lombard Risk Management, Nature, Paddy Power, Rathbone Brothers, Sportech.
Serving up lunches for schoolchildren, army officers and strawberries and cream at sporting events such as Wimbledon, pictured, has been a good gig for the catering giant Compass. It has had a strong first half and management guidance for the full year is positive. Sales growth for the first half is expected to be towards 5 per cent. Analysts expect a 10 per cent-plus dividend hike and a £400m share buyback programme.
Results/Updates: Ark Therapeutics, Compass Group, Cape, Centamin, C&C, Datatec, easyJet, FBD, Greggs, Hill & Smith, Hilton Food, ITV, Land Securities, London Stock Exchange, New Europe Property Investments, Marshalls, OMG, Speedy Hire, Serco, Vitec, John Wood.
Things have been looking sweeter for Dixons Retail for some time. The boom in tablets sales and the demise of rivals such as Comet and Best Buy have helped. Analysts at Numis expect its third-quarter results on Thursday still to be showing the benefits of this before tougher comparisons come into play in the fourth quarter. southern Europe will have remained tough, but Numis thinks the shares are at fair value, with the losses in southern Europe priced in.
Results/Updates: Afren, Antofagasta, Aviva, Bumi, Bovis Homes, Capital & Regional, Cairn Energy, Dixons Retail, Euromoney Institutional Investor, Grainger, 3i Group, Inchcape, Impax Asset Management, Invensys, Kier Group, Marston's, Premier Oil, Rank Group, SIG, Shanks, Stobart, Subsea 7, TalkTalk, Trinity Mirror, Travis Perkins, UTV, Vedanta Resources.
The publisher of The Lawyer and Marketing Week still looks cheap, according to Roddy Davidson, analyst at Westhouse, ahead of its trading update on Friday. He thinks Centaur Media's underperformance "looks disproportionate, particularly in light of the group's medium-term earnings and dividend growth potential". Punters will be hoping it can prove that its transformation from a print-based publisher to a digital and events business is progressing. Westhouse rates it a buy with a 53p price target.
Results/Updates: Alpha Pyrenees Trust, Brammer, Centaur Media, Chesnara, Headlam Group, Huntsworth, Intertek, John Menzies, Rugby Estates, Petrofac, Premier Farnell, Tribal.
EU Retail Sales, Eurogroup Meetings, US Core Retail Sales and US Mortgage Delinquencies.
RICS House Price Balance, Germany's ZEW Economic Sentiment Survey and the Economic and Financial Affairs Council Meetings.
Claimant Count Rate, Jobless Claims Change, Average Weekly Earnings,, Employment Change, the Bank of England Inflation Report and US Empire State Manufacturing Index.
US Unemployment Claims, US Housing Starts and Philly Fed Manufacturing Index.
US Consumer Sentiment Survey.
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