The week ahead (28/07-01/08)
Bookmaker William Hill and housebuilder Taylor Wimpey will update the market in the coming five days.
Monday 28 July
Insurance provider Hiscox (HSX) will kick off this week's company news with the release of its first-half trading statement.
Analysts' expectations: Analysts forecast only slight growth in gross written premiums to £1.1 billion due to previsouly-flagged losses, which include a small exposure to the MH370 aviation loss, the Korean ferry disaster and UK storm and floods.
Peel Hunt analysts expect the pre-foreign exchange combined ratio to be in the region of 84, with a negative foreign exchange hit of around £18 million expected.
'With pressure on rates, Hiscox has reduced its exposure to larger-ticket lines, particularly on a net basis, but opportunities remain in its smaller-ticket regional lines business, and in particular we are interested in the continued development of the US business. Moreover, we will be looking for further clarification on the group's capital return intentions at the year-end,' they say.
The analysts add: 'Hiscox falls within our "buy and hold forever" bucket, justified by having the right mix of business, a disciplined approach to underwriting, reserving, and capital management.
Assuming normal loss distribution for the remainder of the year, we consider that prospects for capital return are strong and we retain our "buy and hold forever" stance.' Peel Hunt has a 'buy' rating on the stock with a target price of 711p.
Valuation: Valued at 1.71 times December 2014E net tangible assets versus the sector average of 1.46 times, the premium is justified by the consistency and lower volatility of return delivered.
Hiscox, Forbidden Technologies, XP Power, Reckitt Benckiser Group, Great Eastern Energy Corporation, ITM Power, Goodwin, Filtronic, National Grid, Great Portland Estates.
Rame Energy, National Grid, Polar Capital Holdings, Weiss Korea Opportunity Fund, PeerTV.
Tuesday 29 July
Opening Tuesday's corporate news will be APR Energy (APR) with the release of its pre-close update, but Peel Hunt's Andrew Nussey expects it to be brief.
Analysts' expectations: First-half revenues are expected to reach $248 million (£146 million) and earnings before interest, tax and amortisation (EBITA) should benefit from a one-off $8 million thanks to its Australian contract.
'Overall, we expect little change to guidance at this stage, with the investor focus likely to be more on the forthcoming interims, where we may get an update on the Libya renewals and the search for a chief financial officer,' says Nussey, rating the stock 'hold' at its target price of 500p.
Next to release an RNS on Tuesday will be Domino's Pizza (DOM) with a first-half update.
Analysts' expectations: There may be room for positive numbers, thanks to a strong first quarter and the fact that people preferred to watch the World Cup at home, say analysts from Peel Hunt
'We are looking for a c10 per cent improvement in UK EBIT [earnings before interest and taxes] to around £28.5 million. The extraction from owned stores in Germany has been painful and we expect a similar first-half loss (£3.2 million) to last year. Overall Peel Hunt's estimate for first-half pre-tax profit is £25 million versus £22.2 million last time.
'The shares have been range bound (c500-560p) during 2014 and interim results may push the shares to the top end of this - presenting a potential trading opportunity,' they add.
June's household lending figures will be published on Tuesday, and Investec's Philip Shaw expects the official number to reach 63,500.
'The number of approvals for house purchase slipped back for the fourth month in a row in May, taking the level down to 61,700, 19 per cent below January's peak. However the rate of decline seems to have been stemmed and recent figures from the British Bankers' Association showed a modest recovery in June by 1,400,' he says.
'But of course it is the medium-term trend rather than this month's data on its own, which will be more significant. Net mortgage lending has been soft but creeping up, reaching £2 billion in May, its highest since July 2008. Note that this equates to a subdued annual rate of growth of the stock of mortgages to 1.3 per cent. We are forecasting net lending this time to remain at the £2 billion level,' he adds.
Circassia Pharmaceuticals, Hutchison China Meditech, Tullett Prebon, Domino's Pizza Group, St James's Place, Jardine Lloyd Thompson Group, Informa, Marsh & McLennan, GKN, Synectics, BP, Brammer, Drax Group, Tyman, Pace, PZ Cussons, Next, Greencore Group, Gem Diamonds.
Acal PLC, Plastics Capital, Byotrol, Halfords Group, Ventus 2 VCT, Vodafone Group.
Wednesday 30 July
Carrying on a week full of interim results will be Moneysupermarket.com (MONY).
Analysts' expectations: Malcolm Morgan from Peel Hunt expects revenue and earnings before interest, tax, depreciation, and amortisation growth of around 9 per cent to £122 million and expects it will be in-line following a recent review.
The second half is set to get the headwind of £39 million of utility switching revenue that will reduce in the face of the more stable energy market place, Morgan adds.
Rating the stock 'hold' with a target price of 200p, Morgan says: 'The story is in our view moving progressively from concern about the issues that are containing growth through to the opportunity offered by the recent spike in IT spend. We tweaked our target price up recently to 200p.'
Also rated 'hold' by the analysts and publishing first-half results midweek will be Taylor Wimpey (TW.), although it is not expected to be particularly exciting.
Analysts expectations: 'A detailed trading update earlier this month leaves little room for surprise in the interim statement. This year has been characterised by more normal seasonal trading for the patterns for the housebuilders and July is likely to have been a relatively quiet month,' says Gavin Jago, an analyst at Peel Hunt.
He adds: 'The land market remains a buyer's market and Taylor Wimpey continues to buy at or above its hurdle rates. This should underpin progression to operating margins exceeding 19 per cent in the next few years.'
Valuation: The broker has a target price of 127p and says the shares trade on a 2015E price/net asset value of 1.4 times and offer a return on equity of 16.5 per cent, broadly in line with the sector average. A yield of over 6 per cent from 2015 will be of interest to income seekers, he says.
Shire, Smurfit Kappa Group, ITV, Moneysupermarket.com, New Europe Property Investments, Rightmove, Riverstone Energy Limited, International Personal Finance, Jupiter Fund Management, Segro, 4imprint Group, Greggs, Tarsus, Taylor Wimpey, British American Tobacco, Hrvatski Telekom, Aer Lingus Group, Travis Perkins, Centaur Media, Dignity, Tullow Oil, First Quantum Minerals, Better Capital, Compass Group, Diploma, WS Atkins, 3i Group.
Northern 2 Vct, WS Atkins, Servision, RENN Universal Growth Investment Trust, Societatea Nationala De Gaze Naturale 'romgaz' S.a. Gdr, Kibo Mining, Scotgold Resources, James Cropper, Forte Energy, Fastjet, Montanaro Uk Smaller Companies Investment Trust, Aurasian Minerals, Mirada, Global Ports Investments Plc Gd, CML Microsystems, Fastjet.
Thursday 31 July
Updating on Thursday will be Centaur Media (CAU).
Analysts' expectations: Analysts at Peel Hunt are looking for up-to-date information to reassess its valuation of the company, which they have a 'hold' rating on with a target price of 60p.
However, they do say: 'The domestic exposure to media and financial services appears attractive. It is the real effect of the reformation plan that will deliver value or not.'
Joining Centaur on the 'hold' bench will be Intu Properties (INTU), with a target price of 300p, as it publishes its first-half results.
Analysts' expectations: Peel Hunt's Kate Renn expects occupancy to improve from the 95 per cent it is currently at, with this being an important step to make before rental growth.
The analysts' view of Intu has thawed slightly thanks to the Bluewater stake acquisition by Land Securities at a low 4.1 per cent net initial yield, she says, 'as it provides evidence of yield shift particularly at its prized shopping centres such as Trafford (4.6 per cent yield) and Lakeside (4.9 per cent yield).'
July's GfK consumer confidence index and Nationwide house price index will be released on Thursday.
Investec's Philip Shaw explains that the consumer confidence index has improved 'dramatically' in the year to June, posting a 20 point increase to its highest level since March 2005.
He says: 'It is difficult to envisage the index rising much further, but the improvement in the general economic environment may result in further modest gains for a while. We are forecasting a small rise to +2.'
As for the Nationwide house index, Shaw notes that signs of a slowdown in activity has not been supported by a softer appreciation of house prices, with the bank's measure stating that house price inflation is running at 11.8 per cent, a nine-and-a-half-year high.
'Indications from the RICS survey show that the expected prices balance fell to a 13-month low in June, but the selling prices balance dipped only modestly (to +52.8 from +56.3).
'This suggests that while increases may moderate over the months ahead, price rises seem set to remain robust for now. We are forecasting a 0.8 per cent monthly increase, consistent with the 12-month rise remaining relatively steady at 11.6 per cent,' Shaw says.
Royal Dutch Shell, Spirent Communications, Promethean World, Weir Group, Greencoat UK Wind, Telefonica, Schroders Plc Non-Vtg Shs £1, Rolls-Royce Group, RPS Group, Travis Perkins, Volkswagen, Laird, Countrywide, COLT Telecom Group, Dairy Farm International Holdings, Essentra, National Express Group, F&C Asset Management, Centrica, Centaur Media, BAE Systems, AstraZeneca, BG Group, Bodycote, BT Group, Hydrodec Group, Hong Kong Land Holdings, Mandarin Oriental International, Inchcape, Merlin Entertainments, Millennium & Copthorne Hotels, Management Consulting Group, Lloyds Banking Group, Megafon, Intu Properties, Diageo, Investec, Thomas Cook Group.
Torotrak, Vitesse Media, Messaging International, Braime, Hotel Corporation, Elektron, Pennon Group, Jupiter Green Investment Trust, Petrel Resources, Octopus VCT, Bonmarche Holdings.
Friday 1 August
Opening the month but closing the week will be the release of William Hill's (WMH) first-half update.
Analysts' expectations: The industry has struggled in the first half of the year, with sporting results favouring the consumer. Peel Hunt's Nicholas Batram expects first-half EBITA to fall to around £172.1 million, largely due to retail's poor performance.
'Despite lower gross win margins we still expect online to show bottom-line growth and, importantly, a further expansion in customer numbers. Like all online groups, it will be interesting to see whether new customers acquired during the World Cup actually deliver a decent return.
'The industry goes through cycles of favourable and unfavourable legislative developments and sports results. We are definitely in the latter, the question is how close to the end are we? With a general election next year and high-street bookmakers a political football, the uncertainty has further to run,' he warns, rating the stock 'hold' with a 367p target price.
July's manufacturing purchasing managers index will be updated on Friday and after rising to a seven-month high of 57.5 in June, Investec analysts think it will stay positive territory, marking a level of 57.
The non-farm payrolls for July will also be released and June's upbeat assessment is expected to continue. Investec's Victoria Clarke says: 'Jobless claims having trended down further (albeit with auto-retooling distortions), employment components of the Empire State and Philly Fed surveys have picked up and broader metrics on the recovery remain firm.
'Hence, we expect jobs recovery momentum to continue robustly. We are pencilling in a non-farm payrolls gain of 240,000 with the unemployment rate ticking down to 6.0 per cent.'
William Hill, Vesuvius, Capital & Counties Properties, Smith & Nephew, Jardine Strategic Hldgs, Rexam, Royal Bank of Scotland Group, Jardine Matheson, Rentokil Initial, Man Group, Robert Walters, Direct Line Insurance Group.
Hyder Consulting, Vedanta Resources.
This article was written by our sister website Interactive Investor.