The Week Ahead: ‘Time has arrived to tuck into Thorntons’
Monday 15 July 2013
As the rest of the high street stumbles from one catastrophe to the next, a surprise survivor is Thorntons. Earlier this month the chocolate-shop operator said its full year profit for this year will be sweeter than investors were expecting, due to good fourth quarter sales. Bethany Hocking at Investec thinks it has improved due to a “combination of sales growth and cost management” and follows actions it has already taken to “gain market share and improve margins”. Ms Hocking thinks that because the positive statement is the second in three months, the results today will be good. She recommends buying the shares and thinks the “good momentum” will continue. Its full year results come on 11th September.
Results/Updates: Amino Technologies, Frenkel Topping, Thorntons, SThree.
What may be a recipe for a migraine for some but following Thorntons on Tuesday is Cathedral City cheddar-maker Dairy Crest. The milk, butter and cheese-maker is on a diet. It is cost-cutting ferociously to pay off debt. Some investors had hoped it would spend the cash from its St Hubert spreads business on new acquisitions but it is putting its balance sheet in order instead. Charles Pick at Numis thinks the group will reiterate how it is “on track for £20m of cost savings” and will update on sales for brands such as Clover and Country Life. Mr Pick rates the food group as reduce with a 444p price target.
Results/Updates: BTG, Computacenter, Dragon Oil, Evraz, ITE Group, Michael Page International, Rio Tinto, Dairy Crest.
Analysts were wondering what property company Land Securities will do next on the retail front. It opened its Leeds Trinity scheme in March and now Chris Spearing at Numis wonders if Oxford will be next. He says the “retail business has consistently outperformed the wider market” so it would make sense for it to get stuck in to another development project – and it bought into Oxford’s existing Westgate Centre in 2010. Investors will also be looking at an update on its London office pipeline. The shares at 959p are at around 4 per cent premium to net asset value and a modest premium to the peer group, so Mr Spearing rates it a hold with a 870p price target.
Results/Updates: Abbott Laboratories, BHP Billiton, e2v Technologies, Electrocomponents, Fresnillo, Hochschild Mining, Intermediate Capital, Land Securities, Severn Trent.
Who would have thought selling cheap sportswear could prove to be so lucrative? Mike Ashley’s Sports Direct International has powered ahead of retail rivals and his strategy of buying up different fashion and clothing brands is paying off. Oriel Securities thinks the full year results on Thursday will show another “strong profits growth”. Oriel has nothing bad to say about Mr Ashley’s group and adds: “At every turn this year, management has been ahead of the market’s sales expectations. This has not come at the expense of gross margins but cost investment has been material as management builds the capability of the online business.” Oriel rates it a buy with a 615p price target.
Results/Updates: Anglo American, Arbuthnot Banking, Breedon Aggregates, Biome Technologies, London Mining, London Stock Exchange, Mothercare, Optos, Secure Trust Bank, Hilton Food Group, Sports Direct International.
On Friday it is time to plug in to Vodafone as it issues a trading update. After months of bid speculation about the telecoms group and its US partner, Verizon, the one deal that has materialised is its £6.5b purchase of Kabel Deutschland. Analysts at Morgan Stanley take the opportunity to take a look at its growth prospects ahead of the trading statement. They like the telecoms giant and say that while “returns in its largest business – Europe – are very high and liable to fall in the long term” they think its international business including the 45 per cent-owned US operation Verizon Wireless Vodafone “can grow”. They rate it overweight – a buy – with a 210p price target.
Results/Updates: Anglo Platinum, DCC, Vodafone, Record.
Rightmove house price data.
Producer price index data, consumer price index data, retail price index, ONS house price data.
Bank of England Monetary Policy Committee minutes, unemployment data, average earnings figures..
Retail sales figures.
Public sector borrowing data, G20 finance ministers and central bank governors’ meeting.
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