The Week Ahead: Future looks good for BSkyB's HD business
Monday 19 October 2009
Analysts expect to hear of strong demand for BSkyB's HD, or high-definition, products when the satellite television group posts first-quarter results at the end of this week.
HD volumes should sustain the momentum of the group's key performance indicators, according to Citigroup, which said that while the segment is hard to pin down in models, quantitative surveys and an installed base of about 10 million flat screens suggests that the market potential for HD offerings is significant. "At the same time, the backlog of installations from the fourth quarter would suggest [that] the first quarter should be strong," the broker said.
But the expectations may dampen the impact on the share price, with UBS, which is also bullish on HD, saying that investors are already anticipating a reassuring quarter following management comments in recent months. As a result, solid first-quarter numbers may fail act as a short-term catalyst for the shares.
Looking further ahead, and notwithstanding the uncertain macroeconomic picture, Numis is hopeful of "robust" earnings growth over the medium term. "Although we are nervous on the UK economy, we see BSkyB as a business which will hold up well in a downturn (due to the compelling value of its triple play proposition) while offering upside potential when the economy improves (as consumers can upgrade to more expensive products)," the broker said, retaining its "buy" stance ahead of this week's results.
Today: Results/Updates - First Derivatives, Senior and Petropavlovsk.
Tomorrow: Third-quarter results from the software group Autonomy are likely to beat the management's guidance, according to Exane BNP Paribas, which expects the update to boost the market's faith in full-year expectations of $740m in revenues and $1.05 in adjusted earnings per share. "While it was cautious on the split between [the third and fourth quarters], the company was still confident on its pipeline for the full year," the broker said. "We believe a good third quarter will increase investors' confidence in Autonomy's ability to achieve its full-year guidance."
Also tomorrow, publishing group Pearson, which owns the Financial Times, is due to post an update, and Citigroup expects to hear a reiteration of guidance of at least 57.7p in earnings per share for 2009, which the broker said "could lead to consensus upgrades at [the] low end of the range". The broker added: "Schools is seen as an area at risk (given budget pressures), therefore a reiteration of share gains will be important. "At [the first half-stage] Pearson noted that it was taking a 37 per cent share of new adoptions in markets where it competed. Last time we heard from the company, it spoke about a $500m adoption market opportunity for 2009, rising to $900m in 2010."
Results/Updates - Greggs, Rathbone Brothers, Pearson and Autonomy.
Wednesday: Results/Updates - Drax, Elan Corporation, Home Retail Group, Manganese Bronze Holdings and Cadbury.
Thursday: Panmure Gordon expects to hear of a 50 per cent decline in first-half pre-tax profits when Luminar, the nightclub operator, posts interim results this week, with the figure falling to £4.2m. The broker said much hinges on the key Christmas period, which will be "crucial in determining the relative success of the financial year ... with Christmas Day falling on a Friday, the group loses the second-busiest trading night of the week whilst Boxing Day (a big Christmas-period night out) will be on Saturday and any incremental boost to trade will be limited. With New Year's Eve on a Thursday there are also likely to be fewer admissions on the Friday and Saturday nights."
Also on Thursday, don't expect surprises when Petrofac, the oil services group, posts an interim management statement, according to Numis, which is does not anticipate the announcement of any major contracts. "Petrofac is running with a record backlog of $8.4bn after winning $5.8bn of new awards year to date," the broker said. "We see risk to further backlog growth given internal capacity restrictions and expect Petrofac to retain backlog at current levels over 2010."
Results/Updates - Debenhams, Dragon Oil, Petrofac and Luminar.
Friday: Results/Updates - Brit Insurance, Filtrona, Provident Financial and British Sky Broadcasting.
Monday: London Retail Sales monitor.
Tuesday: CML mortgage lending figures, Bank of England capital issuance and Board Money estimates; Public sector finances for September.
Wednesday: Scottish retail sales monitor; CBI quarterly industrial trends survey; Agents' summary of business conditions; NIESR quarterly review of UK and world economies.
Thursday: Monthly retail sales figures; Bank of England lending trends.
Friday: Third-quarter GDP figures; car production numbers.
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