The Week Ahead: Analysts predict strong revenue for Imagination
Monday 13 December 2010
There was not a great reaction to Imagination Technologies' announcement of a $47m (£29.6m) deal to buy HelloSoft in November, so Numis Securities' prediction that the chip maker's interims tomorrow may see it reveal a further acquisition could worry some.
Aside from that, the broker's analyst Nick James is forecasting "strong royalty volumes offset by weakness in [its digital radio unit] Pure", as well as group revenue of £47.4m, which would be a 24 per cent year-on-year rise.
Although Mr James says that he remains "attracted to [Imagination's] positioning and prospects", he has still cut his advice to "reduce", saying that "with the stock up 76 per cent over the past year, [we] are conscious that a lot has been priced in."
Looking to the future, the group is in close competition with its rival, ARM Holdings, over providing chips for use in smartphones, and Mr James has sounded a warning over Imagination's involvement in a market that is being shaken up by Googe's "Android".
Noting that the performance of the company, whose technology can be found in the iPhone, "has been closely tied to Apple's", he warns: "Android's rapid gains ... suggest Apple won't completely dominate the market as it did with portable media players."
Carpetright will be hoping when it releases its interim results tomorrow, that investors will not respond as badly as they did to its second-quarter update in October. Then, a significant fall in like-for-like sales prompted the retailer's share price to drop by more than 7 per cent.
Following those numbers, Numis lowered its pre-tax profit forecast for the full year to £26m, and this time its analyst Andrew Wade is expecting no "significant surprises". Although he calls it "a high-quality business", his recommendation on the company is "reduce" as he describes its share price as "expensive".
Also enlightening the market tomorrow with an update is Whitbread, which is due to release its interim management statement. HSBC's Ben O'Toole reckons that, after two years of "investing in price in order to increase occupancy towards management's 80 per cent target", the year 2011 will see "underlying pricing [turning] positive" at the group's successful budget hotel chain, Premier Inn. Back to the present, Mr O'Toole expects strong trading not only from Premier Inn, but also from Whitbread's pub restaurants and the Costa Coffee chain. Yet he has downgraded the group from "overweight" to "neutral" on valuation grounds, despite his positive outlook overall. Keen watchers of the small-cap companies will be looking out for Renovo's preliminary results tomorrow. The biotech company, which develops drugs for scar reduction, received a boost at the end of last month with the publication of positive results from a new formula of its Juvista product, designed for children.
Panmure Gordon's analysts call it "a novel, first-in-class product", and say they are expecting more and more news to come out next year on the drug, which they feel is "the main value-driver for the Renovo investment thesis".
In terms of the figures being announced, Panmure – which has Renovo on a "buy" recommendation – says the only really important number is the cash position; it forecasts that the group will declare reserves of £46m, and first-half revenues of £9.8m.
Results/Updates: 2ergo, Betfair, Carpetright, Domino Printing Sciences, Drax, Go-Ahead, Imagination Technologies, Private & Commercial Finance, Renovo and Whitbread.
Results/Updates: Expansys and Senior.
Results/Updates: Chrysalis, Cohort, Imaginatik, John Wood and Sports Direct International.
Pub group Punch Taverns releases its interim management statement on Friday, and Deutsche Bank's Geof Collyer is forecasting that like-for-like profits will be "at the bottom of the sector performance", despite evidence of positive results hopefully being seen from "the refurbishment programme in the managed estate".
Investors' eyes will be turned towards central Asia, according to Numis, when the oil services group Petrofac unveils its latest trading update at the end of the week.
"[It] may provide further detail on the large South Yoloten phase II contract in Turkmenistan," says the broker's analyst, Sanjeev Bahl, "which is expected to be awarded before year-end". He also forecasts like-for-like bottom-line growth of more than 20 per cent.
Results/Updates: Keller, Petrofac and Punch Taverns.
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