Date: Tuesday 24 Jul 2012
LONDON (ShareCast) - GlaxoSmithline's second quarter update should see the group just about manage to increase revenue year-on-year if the analyst community following the pharmaceuticals colossus is on the money.
Second quarter revenue is tipped to rise to £6,750m from £6,720m a year earlier, while core operating profit is forecast to rise to £2,153m from £2,071m in the second quarter of 2011.
The stock yields around 4.8%, making it a popular choice with income investors. The market is expecting the second quarter dividend to be 17p, the same as the first quarter pay-out, but up from 16p in the second quarter of last year.
Heavyweight chip designer ARM Holdings will update investors with its second-quarter trading, as concerns mount that the company's competitive advantage in the fast-growing hand-held devices market will be eroded by US computer chip behemoth Intel.
Jefferies said in a statement earlier this month: "It's perhaps not a dearth of new news in the name thats limiting upside we think instead the market is concerned on 2Q royalties (weak guide) and order cuts in the channel for some handset makers (mainly RIM, Nokia; some at others like Samsung, Hua, HTC and ZTE) into 3Q12." The broker expects a $205m top-line, with royalties accounting for $104m and licensing $76m.
Tobacco products provider British American Tobacco (BATS) has been fighting against currency headwinds. Despite this, Panmure Gordon thinks that pricing gains should ensure underlying half-year operating profit edge up from a year ago, to around £2,795m.
"We forecast BATS will report 2% revenue growth to £7,615m driven by an anticipated 0.4% rise in volumes to 346bn sticks and price / mix benefit of 5.5% being offset by currency headwinds of 4%," the broker said.
Market consensus is for earnings per share of 102.5p. Panmure Gordon is expecting an interim dividend of 42.2p.
Outsourcing specialist Capita is set to announce half-year figures, having been unusually quiet of late.
"After a flurry of activity at the start of the year, which locked in the organic growth targets for the year (c4%), the contract announcements have gone quiet again," notes Peel Hunt.
"We expect the pipeline to have remained high (£4.7bn at Dec), but we need to see more deals announced for the shares to advance. Added to the pressure of signing deals is now the pressure to deliver the quality acquisitions that management raised £280m to take advantage of back in April," the broker added.
On the economic side of things, UK gross domestic product data (GDP) for the second quarter at 9:30 could shift the market. Economists are expecting a 0.2% quarter-on-quarter decline, and a 0.3% year-on-year fall. Any quarterly decline would see Britain enter its third month of recession.
ARM Holdings, British American Tobacco, Capita, GlaxoSmithKline, Informa, Lancashire Holdings, Mecom Group, Morgan Crucible Co, Synectics, Tarsus Group, Telekomunikacja Polska S.A GDR (Reg S), Torchmark Corp., Tullow Oil
INTERIM EX-DIVIDEND DATE
Arden Partners, Blackrock Income And Growth Investment Trust, Fenner, Throgmorton Trust
QUARTERLY PAYMENT DATE
Assura Group Ltd., Molex Inc., Molex Inc. 'A' Shares
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
IFO Business Climate (GER) (09:00)
IFO Current Assessment (GER) (09:00)
IFO Expectations (GER) (09:00)
MBA Mortgage Applications (US) (12:00)
New Homes Sales (US) (15:00)
ARM Holdings, GlaxoSmithKline, Lancashire Holdings, Lilly (Eli) & Co, Torchmark Corp.
Brewin Dolphin Holdings, easyJet
Caledonia Investments, FirstGroup, Great Western Mining Corporation, HICL Infrastructure Company Ltd, Hogg Robinson Group, Johnson Matthey, Oryx International Growth Fund Ltd., red24, Rensburg AIM VCT, Taihua, Totally, Tri-Star Resources , TyraTech Inc. (Reg S), Zoltav Resources Inc
UK ECONOMIC ANNOUNCEMENTS
CBI Industrial Trends Surveys (11:00)
GDP (Preliminary) (09:30)
Index of Services (09:30)
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Braemar Shipping Services, Templeton Emerging Markets Inv Trust
FINAL EX-DIVIDEND DATE
Atkins (WS), Coral Products, Henderson Private Equity Inv Trust, IBIS Media VCT 1, Investec, London Stock Exchange Group, Puma VCT V, SSE, Volex