The Week Ahead: Shire Pharma could disappoint, warns CSFB

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The Independent Online

The Swiss broker predicts Shire's results will show that the group is up against the rising cost of launching its pipeline of drugs, the burden of its recently acquired (and loss making) TKT business and weakening sales of some of its key products due to generic competition.

CSFB fears the City's forecast for Shire's 2006 earnings do not properly take account of these factors. It suggests downgrades are very likely to materialise in the wake of Thursday's results. Therefore the broker has removed its "trading buy" recommendation from the stock in the run up to the figures. However, it does admit that the group's shares will be boosted by news of delays to generic versions of Adderall XR, its key hyperactivity treatment.

As for Shire's pipeline of new drugs, the Swiss broker expects the management at the pharma group to give an idea of potential launch dates for its MTS and Dynepo treatments. On the earnings front, for the third quarter it expects Shire to deliver sales of about $382m and earnings per share of $0.15.

TODAY: Investec Securities expects a poor set of first half results from Clinton Cards. Not only is the retailer up against dire conditions on the High Street, but also it is struggling to restructure and reposition its Birthdays chain, warns the broker. Traditionally, Clinton Cards makes a small profit in the first half of its financial year but due to the cost of reforming Birthdays a material loss is likely this time around

Investec has pencilled in a deficit of around £11m, compared with a profit of £3m at this stage in 2004. Going forward, the broker fears that Clinton Cards will struggle to complete the required restructuring at Birthdays before the all-important Christmas trading period. It predicts the green shoots of recovery will not start to emerge at the chain before spring.

Results: Full year - Net B2BB2; Lok'nStore Group. Interims - Bede; London & Boston; Clinton Cards.

TOMORROW: Imperial Tobacco's annual results will show that the group has enjoyed another strong year and its outlook statement is tipped to boast that there is no reason why this cannot be repeated in 2006. Brokers forecast the tobacco giant will unveil a pre-tax profit of £1.1bn, up from £1bn last time around. Imperial Tobacco's massive share buyback programme will continue into the new year with analysts expecting it to repurchase up to £450m worth of its own stock during the next 12 months.

Results: Full year - Dickinson Legg; J Smart & Co; Imperial Tobacco. Interims - BAA; Matalan; Strategic Regail; Surfcontrol; TTP Communications..

WEDNESDAY: Results: Full year - Armour; Phytopharm. Interims - Theo Fennell.

THURSDAY: Third quarter profits at ICI will be little changed on the £123m achieved by the chemicals giant last year as the high price of oil has been holding back the group's performance. In the coming year, ICI's management will be hoping for a retreat in the price of crude and that global economic activity does not weaken significantly.

Trading continues to be tough for all of Pilkington's key glass markets. A 20 per cent rise in first half pre-tax profits is expected at the group but will be thanks to income from its engineering business and the licensing of some of its technology. The ongoing cost reduction programme will also have also given the bottom line a boost. Investors can expect a slight rise in Pilkington's interim dividend to around 1.9p a share.

Relative to the first half, ABN Amro forecasts Unilever's third quarter to be characterised by better sales trends but weaker profit margins. The latter will be the product of both cost pressures on the consumer goods giant and higher marketing spend. Given that the City is currently more concerned about Unilever's top line health than its bottom line progress, such a performance is likely to cause the group's shares to rally in the near term, according to ABN. But in the longer term, the broker cannot see the stock making significant progress as higher input costs look set to hold back earnings for some time.

Results: Full year - Asia Energy; McCarthy & Stone. Interims - Autonomy; Alliance UniChem; Carphone Warehouse; Danka Business Systems; First Group; ICI; International Power; London Stock Exchange; Millenium & Copthorn; Pilkington; Shanks Group; Shire Pharmaceuticals; Tate & Lyle; Unilever.

FRIDAY: Results: Full year - None. Interims - British Airways; BskyB.

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