The Week Ahead: Morrisons in focus on shares buy-back hopes

With expectations high that it will unveil a share buy-back this week, investors in Morrisons have a reason to look forward to the supermarket group's full-year figures on Thursday, despite the downcast sentiment surrounding the wider sector.

Evolution Securities believes "a shares buyback is likely (£1bn over two years has been mooted)", but warns that it sees "little room for any major positive surprise in the numbers, as the ... consumer environment remains subdued and the food retailers remain under pressure".

Noting that "competition is intensifying, the consumer environment is tightening and space additions are accelerating", the broker's analysts say they are "more cautious on the sector than any time in the last 20 years, but Morrisons has the greatest capacity for self help".

In terms of how the supermarket plans to weather the storm, they are expecting any news on strategy to be "incremental rather than game-changing", and that it should include "further news on Project Liberate (freeing of space in store) and on systems development and roll-out".

Meanwhile, JPMorgan Cazenove is expecting "solid results", predicting total sales of £16.6bn and a pre-tax profit of £875m. However, it is fairly bearish on the outlook, noting that Morrisons "remains solely reliant on the UK for its growth and consumer trends do not look favourable". Saying it believes the shares deserve to be at their current cheap level, the broker adds that although "a large capital return may buoy the shares on the day, fundamentally growth is harder to come by in the medium term".

Today

Results/Updates: Inmarsat, Intertek, Michael Page, Petrofac, SDL and Stagecoach.

Tomorrow

Tuesday sees Pace update the market with its preliminary results, and there is expected to be a focus on the set-top box manufacturer's $475m acquisition last year of 2Wire.

Jonathan Imlah, of Collins Stewart, notes that the purchase of the US broadband technology company "met with a very mixed response" at the time, but he is "increasingly convinced that it was a very sensible strategic move" and he expects the original guidance of cost synergies totalling $30m to turn out to be "conservative".

Elsewhere, Mr Imlah believes its year-on-year revenue will have grown by 17 per cent, adding that although in the second half "guidance was for flat revenues and margins following the pull forward of the World Cup ... we would not be surprised to see sequential improvement".

Also updating tomorrow is the copper miner Antofagasta and, after Kazakhmys' forecast-beating figures last week, it is expected to have benefited from the recent gains in the copper price.

Evolution Securities thinks it will reveal sales of $4.47bn and pre-tax profits of $2.18bn, while for the year ahead its analysts see the new Esperanza mine as providing a big boost.

Results/Updates: Antofagasta, Ashtead, AZ Electronic Materials, Inchcape, Old Mutual, Pace, Spirax-Sarco and Weir.

Wednesday

Recent months have been positive for Prudential, whose shares have risen by about 25 per cent since the end of November, but JPMorgan Cazenove believes it is now fully valued.

The broker says that among the points of interest to look out for in the insurer's full-year figures is the top line of its Asian arm, where Cazenove is predicting that year-on-year growth will have slowed in the final quarter with "India being a drag".

Results/Updates: F&C Asset Management, Interserve, Melrose, Prudential, The Restaurant Group, Tullow Oil and Yule Catto.

Thursday

Results/Updates: Aggreko, Computacenter, Derwent London, Dignity, IG Group, Punch Taverns, Schroders, Standard Life and Wm Morrison.

Friday

JD Wetherspoon finishes the week off for investors with its interim results on Friday, but those hoping for a similarly strong update to a year ago – when it revealed record first-half profits – are likely to be disappointed, Altium Securities believes.

Analyst Greg Feehely predicts lower margins and an increased debt cost, but he remains positive on the company, saying it has still got an impressive openings programme.

Also updating on Friday is Home Retail, with Royal Bank of Scotland expecting both trading and margin pressure to be in evidence at its Argos business. Happily for investors, the broker is more bullish on the Homebase chain, predicting "positive like-for-like sales and a robust gross margin performance."

Results/Updates: Home Retail and JD Wetherspoon.

Today

Eurozone Sentix investor confidence index.

Tomorrow

BRC retail sales monitor; Rics house price survey.

Wednesday

BRC shop price index; Visible trade balance.

Thursday

BoE's Monetary Policy Committee announces interest rate decision; Industrial production; ECB's Monthly Bulletin; Manufacturing output; NIESR GDP estimates; US monthly budget statement.

Friday

Producer price data; University of Michigan consumer sentiment index.