The Week Ahead: Investors have liked Barclays’ cost-cutting plans and its dividend yield
Monday 10 February 2014
The banks backlash continues as bonus payouts and the sheer amount of money being set aside for PPI mis-selling claims appears to be endless.
Tomorrow is Barclays’ turn to face the City.
The big issues for investors were its capital requirements and regulatory pressure.
There was an easing in the amount needed for banks to hold on their balance sheets last year, although Barclays still performed a rights issue.
Analysts at Deutsche Bank expect its fourth-quarter results to show a £862m adjusted pre-tax profit and investors have liked its planned cost cutting, the deleveraging of its balance sheet and its good dividend yield. Deutsche rates it a buy.
On Wednesday the focus will be on consumer goods giant Reckitt Benckiser. Analysts at Credit Suisse argue the interest in the group has been too focused on its pharmaceuticals and drugs arm rather than the rest of its consumer goods divisions.
Ahead of its 2013 results they raised their rating to outperform while Panmure Gordon expects sales to be up 5 per cent on a comparable basis “driven by strong growth in its health & hygiene brands” which account for around 70 per cent of sales. The shares have also been in favour recently on the back of M&A rumours as traders hoped it may bid for US-based Merck’s consumer care division and sell off its drugs arm. But Liberum Capital expects it to miss consensus estimates and has rated it a sell.
First-half figures from pawnbroker Albemarle & Bond are due midweek. The group abandoned plans to sell itself recently and the share price is down 90 per cent on a year ago.
On Thursday when Lloyds Banking Group issues its 2013 results. After a fourth-quarter £1.8bn PPI charge it will report a fourth consecutive year of negative earnings. Investec’s banks expert Ian Gordon said Lloyds is now his “fourth-favourite UK bank”. It forecasts pre-tax profit of £6.2bn.
Also on Thursday is Primark-to-sugar business Associated British Foods’ trading update. Worries about sugar pricing have weighed on the group. Although Primark’s sales are still booming this might not make up for the problems elsewhere.
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