The Week Ahead: Advertising recovery expected to boost ITV

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The Independent Online

With the next round of substitutions between the FTSE 100 and FTSE 250 soon to be calculated, ITV may well make a return to the blue-chip index, and the reaction to its full-year results this Wednesday could seriously affect its chances.

Positivity ahead of the figures has come from the bullish sentiment around advertising recently, and in the broadcaster's interim management statement last November it predicted advertising over the third quarter would have risen by 16 per cent.

UBS's Tamsin Garrity believes ITV will announce a fall in its net debt to around £300m, and says it could take the opportunity to resume dividend payments.

Meanwhile, Numis Securities predicts that by the end of 2011 it "will be almost debt free". Although the broker's profit-before-tax estimate of £280m is below market expectations, it is still a fan, saying the company is "structurally robust".

In terms of its outlook for the year ahead, Numis' analysts say that part of the reason for the strong advertising rebound was the World Cup, and the absence of it in 2011 – plus macro uncertainty – has made ITV "understandably cautious".

They also note that considering its "stated aim of deriving half of revenues from non-ITV1 advertising by 2013, we expect the group to become more acquisitive and believe production and basic tier Pay TV channels are the most likely areas for expansion."



Today

The market has already heard from Lloyds Banking Group, Royal Bank of Scotland and Barclays, and today it is the turn of HSBC to release its annual results before Standard Chartered does the same on Wednesday. Goldman Sachs says "the market currently underestimates the pace of HSBC's US recovery and the medium-term impact of the group's mix shift towards emerging markets on returns and growth", and its earnings-per-share estimates for this financial year and the next are 7 per cent and 9 per cent above consensus respectively.

Nomura's Daniel Shum, meanwhile, is keen to hear the strategy of the new management, as well as its return-on-equity target. Mr Shum estimates that the bank will reveal a full-year profit-before-tax of $18.5bn, below market expectations, but says that "impairments are likely to be the bright spot".

Results/Updates: Associated British Foods, Avis Europe, Bunzl, Hays, Hiscox, HSBC, Keller, Pearson, Senior, Ultra Electronics and WSP.



Tomorrow

The publishing group UBM announces its numbers for the full-year tomorrow, with its last update in October revealing a revenue increase for the first nine months of nearly 4 per cent. Gareth Davies, an analyst at Investec, feels this will have risen slightly after the final quarter, resulting in a total of £881m. However, he points out that the outlook will be the main issue in terms of its share performance, saying he expects "to see a continued improving trend".

Results/Updates: Cookson, Elementis, Fresnillo, GKN, Jardine Lloyd Thompson, Meggitt, moneysupermarket.com, Persimmon, Provident Financial, Rotork and United Business Media.



Wednesday

Results/Updates: Admiral, Amlin, BBA Aviation, Capital & Counties, Carillion, International Personal Finance, International Power, ITV, Robert Walters, RPS, Serco, Standard Chartered and Whitbread.



Thursday

JP Morgan Cazenove is fairly bullish about Aviva's results, out on Thursday, with the broker seeing "upside rather than downside risk to forecasts." Its analysts note that, through a number of investor days, Aviva "has already successfully reduced the market's perception of the risk in the group ... and this is largely in the share price now".

In terms of the numbers, they expect the insurer's operating earnings to have increased by nearly a quarter year-on-year and that new business sales will have risen 12 per cent in the last three months.

Results/Updates: AMEC, Aviva, Balfour Beatty, Cobham, CPP, Howden Joinery, IMI, Kazakhmys, Spirent, Taylor Wimpey and Trinity Mirror.



Friday

Expectations are high for WPP's full-year results on Friday, following impressive figures from a number of its global peers in the advertising sector. In the US, Omnicom's revenue for the 12 months was up more than 6 per cent while the French group Publicis was particularly positive on the outlook for the months ahead. Panmure Gordon's Alex DeGroote has increased his expectations for WPP as a result, raising his prediction for its top-line organic growth to over five per cent.

Results/Updates: SThree and WPP.

Today

US pending home sales; US personal income and spending data.



Tomorrow

Bank of England consumer credit; BoE mortgage approvals; Eurozone PMI (manufacturing); eurozone unemployment rate; Nationwide house prices; PMI (manufacturing); US ISM index (manufacturing).

Wednesday

PMI (construction); US ADP employment report; US Federal Reserve Beige Book.



Thursday

ECB rate announcement; PMI (services).



Friday

US nonfarm payrolls.

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