The Week Ahead: Has Sainsbury's share price been flattered by bid gossip?

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The Independent Online

A host of big brand names hit the earnings catwalk this week and one of the most keenly anticipated events will be the first-half report from grocery giant J Sainsbury after its shares struck a four-year high at the close of last week.

Fuelling its pre-results share run was speculation that private equity firms were planning a takeover bid. But while the market swapped merger theories, analysts remained divided on the numbers. Merrill Lynch analyst John Kershaw predicts Sainsbury's will post a 75 per cent rise in pre-tax profit to £260m, with a round of earnings upgrades to follow.

But ABN Amro analyst Justin Scarborough is more conservative, predicting a 59 per cent jump to £188m and adding that cost pressures could limit Sainsbury's second-half profit growth. Mr Scarborough recommends that investors sell the stock because "the share price has got ahead of itself and is discounting either large upgrades or a bid, neither of which we believe is likely".

From big-name grocer to big-name mobile phone company and Vodafone posts its first-half results on Tuesday, just three days after announcing it aims to become a big name in the highly competitive broadband market. Analysts expect that Vodafone - which said it will launch a retail broadband product for UK customers on 8 January - to reveal its 2006-07 forecasts at the top end of the market's expectations. The City predicts it will report interim earnings of around £6bn.

Not expecting the best from Alliance Boots is Evolution Securities analyst Freddie George, who thinks pre-tax profit will rise by a modest 3 to 5 per cent to £265m. The interim report will be the first since the merger between Alliance UniChem and Boots earlier this year. Mr George believes the concern for Boots is the outlook, which is deteriorating as the big supermarkets increase their share of the pharmacy market.

Investors will turn up the volume when music publisher EMI delivers interims. Its shares have suffered since news last month of an accounting fraud at its Brazilian subsidiary and a warning that its first-half pre-tax profit would be a third lower than a year ago. Meanwhile, the results of rival Universal will be scrutinised when its French parent, Vivendi, hands down third-quarter results.

Energy companies will remain in the spotlight after revelations last week that ScottishPower and Spain's Iberdrola were in merger talks. ScottishPower delivers its interim results, as do Scottish & Southern Energy, National Grid and British Energy.

Burberry flies the flag for the fashion industry next week. While the company recently revealed that first-half sales had soared 10 per cent, investors will be keen to know whether this has translated into fatter profits. Across the Atlantic, fashion retailer Gap is due to report third-quarter results.

EasyJet rolls on to the reporting runway with full-year results. Investors will hope the discount airline can go one better than rival Ryanair, which revealed last week that interim net profits had risen 39 per cent to €329m (£220m). Barclays analyst Peter Caldwell said investors would be on the lookout for increasing costs, particularly for fuel and leasing, and expects easyJet to post a pre-tax profit of £122.4m, up from £85.3m.

Allegations of price fixing will be something that Robert Wiseman Dairies will hope to temper when it reports its first-half results. The group revealed last month that it was being sued by Arla, the UK's largest dairy producer, after a provisional ruling by the Office of Fair Trading that Wiseman and other milk suppliers may have breached competition rules on price fixing in Scotland.

Soaring prices for commodities should bode well for Vedanta Resources, the zinc, aluminium and copper group, which reports first-half results.

To the leisure and drinks sector, and brewer Young & Co delivers its first set of interims without stalwart chairman John Young, who died from cancer in September at the age of 85. Meanwhile, Intercontinental Hotels will deliver its third-quarter results.

From plush hotels to Footballers' Wives, and investors in television company Shed Productions will be hoping it has found a home for its drama Bad Girls, which was recently shelved by ITV after eight series. Meanwhile, ContentFilm, the movie-production company responsible for Divorcing Jack, posts its interim results.

Turning to the US and Hewlett-Packard's management will be hoping a strong set of fourth-quarter numbers can create a different set of headlines. The hi-tech giant has spent months in the spotlight over a boardroom spying scandal.

Another big US name, Starbucks, is scheduled to serve up its fourth-quarter results.

CALENDAR

Tomorrow 13

UK RESULTS: (final) Carr's Milling Industries, Diploma; (interim) Latchways, Majestic Wine, Robert Wiseman.

Tuesday 14

UK RESULTS: (F) easyJet; (I) Alliance Boots, Babcock International, Burberry, Business Post, Charles Stanley, Emap, Endace, Kewill Systems, Northern Foods, Viridian, Vodafone, VT Group, XKO Group; (third quarter) Intercontinental Hotels.

Wednesday 15

UK RESULTS: (F) ADVN, Dimension Data, Lonmin, Shed Productions; (I) Avocet Mining, EMI, J Sainsbury, Land Securities, Luminar, Marchpole, Scottish & Southern Energy, Touchstone.

Thursday 16

UK RESULTS: (F) Imperial Innovations; (I) ContentFilm, Eurocastle Investment, Intelek, Investec, National Grid, Vedanta Resources, William Ransom & Son, Young & Co's Brewery; (3Q) Orpak Systems.

Friday 17

UK RESULTS: (I) Supporta, British Energy, Vectura.

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