The Week Ahead: Three-month forecast to hold key for CSR shares

 

Today

 

The poor economic situation in the UK and the US was blamed by CSR in October when the chipmaker warned fourth-quarter revenues would miss market expectations. The group kicks off the week with its results for the period, and with Liberum Capital not expecting any further surprises – positive or negative – from the numbers, the broker's analysts believe how CSR's share price reacts will be all down to its forecast for the first three months of the new financial year.

They predict it will manage first-quarter sales of $210m, a 12 per cent fall from the previous quarter. They also say that while another share buyback is possible, "we believe management may wait until further into its current transition".

Results/Updates: CSR, International Ferro Metals, Lo-Q and XP Power.

Tomorrow

With Drax announcing its full-year results on Tuesday, Deutsche Bank expects its operating profits to have fallen over 20 per cent to £267m thanks largely to an increase in coal costs. However, the broker believes the Square Mile will be more interested in the government's decision, expected this spring, on whether to give further support for producing renewable electricity by co-firing biomass with coal, so any comments on this will be closely examined.

Results/Updates: Albemarle & Bond, Amec, Croda, Dechra Pharmaceuticals, Devro, Dragon Oil, Drax, Genus, Morgan Sindell, Rathbones and Segro.

Wednesday

The reporting season for the housebuilders continues with Barratt Developments' interim figures on Wednesday. The group expects operating profits over the period to have shot up 40 per cent, so a key factor will be whether it believes it can continue this level of growth for the rest of the year. Any insight on the state of the housing market will of course be scrutinised.

Results/Updates: Barratt Developments, Filtrona, Galliford Try, Hays, Logica, Micro Focus, Millennium & Copthorne Hotels, Rexam, St James's Place and Travis Perkins.

Thursday

After Imperial Tobacco released its first-quarter figures earlier in the month, it is British American Tobacco's turn to update the market on Thursday. Citigroup believes the group will announce earnings per share for the year of 194p, which would be a jump of 10.4 per cent from the previous 12 months.

The broker's analysts also expect operating earnings to have risen 9.2 per cent, although they point out this would be significantly lower if rival Japan Tobacco had not suffered severe supply disruption in the wake of the earthquake and tsunami in the country. They also believe BAT will be questioned on plain packaging laws – set to be introduced in Australia later this year – as well as the outlook for Japan, although they predict "little hard news" on both subjects.

Royal Bank of Scotland continues the run of results from the sector with its full-year numbers on Thursday. Shore Capital's Gary Greenwood expects it to reveal another statutory pre-tax loss, thanks partly to costs for restructuring and PPI mis-selling payouts. He predicts operating profits will have risen to £2.14bn from £1.91bn over the previous twelve months.

Results/Updates: Avocet Mining, Ashmore, Bodycote, British American Tobacco, Capita, Capital Shopping Centres, Centaur Media, Centrica, Colt, Go-Ahead, Informa, Kier, Lancashire, Mondi, New World Resources, Redrow, Royal Bank of Scotland, RSA, Sinclair IS Pharma and Wentworth Resources.

Friday

Lloyds, the other state-owned bank, reports full-year results this week, with boss Antonio Horta-Osorio at the helm after having missed the group's last update in November when he was on sick leave. One of the key areas of focus, according to Morgan Stanley's Chris Manners, will be impairment charges. The analyst is expecting that for the last three months of the year these will have risen to £2.3bn because of an increase in wholesale loan losses.

Results/Updates: Berendsen, Hammerson, Lloyds, New Britain Palm Oil, Rightmove and William Hill.

Economics Diary

TODAY Rightmove house price index.

TOMORROW Public sector net borrowing;

WEDNESDAY Bank of England Monetary Policy Committee minutes; Eurozone flash manufacturing PMI; Eurozone flash services PMI; Eurozone industrial new orders; US crude oil inventories; US existing home sales.

THURSDAY BBA mortgage approvals; CBI industrial order expectations; US unemployment claims.

FRIDAY Preliminary business investment data; Revised GDP.

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