The Week Ahead: MFI investors hope for signs of a buyout

So what can we expect from MFI's interim results on Thursday? Well, the figures and accompanying statements will certainly be keenly watched by many in the City. Bulls of the retailer reckon that a takeover bid, possibly a private equity backed management buyout, is just around the corner, while bears have been betting on a profit warning from the group.

So what can we expect from MFI's interim results on Thursday? Well, the figures and accompanying statements will certainly be keenly watched by many in the City. Bulls of the retailer reckon that a takeover bid, possibly a private equity backed management buyout, is just around the corner, while bears have been betting on a profit warning from the group.

Although a note from Investec Securities did not rule out the possibility of an MBO, the broker was far from positive about current trading at MFI. It believes the group is facing stiff competition from rivals, who have been ramping up their respective product offerings recently, and also suggested that it may be experiencing some operational difficulties at its warehouses. As a result, Investec cut its full-year pre-tax profit forecast by £16m to £99m. For the interim stage, it predicts that profits will drop to about £44m from £54m last year.

Investec believes the persistent rumours of an MBO will provide a floor for MFI shares, but worries that if the group's profits were to take a major dive it could undermine the management's ability to raise funds for a buyout. "A situation where profit at MFI's UK retail chain is moving backwards, plus concerns that growth at the Howden's building materials unit may be flagging, would not be the ideal backdrop to raise money for a buyout," Investec said.

TODAY: Shares in ARM Holdings have suffered before the group's interim results after disappointing statements from a number of US semiconductor companies, most notably the sector giant Intel. But investors should not be too concerned, argues Arbuthnot Securities. It notes that ARM specialises in designing chips for mobile phones while Intel is focused on the personal computer market. Hence, the broker predicts that ARM will reveal that its recovery is on track and forecasts adjusted profits at the group to rise to £17m from £13.3m last time.

Results: Full year - Epic Group. Interims - ARM Holdings.

TOMORROW: In April, Northern Rock warned of a "slight easing" of its margins as a result of the rising cost of borrowing. Since then, the mortgage lender's share price has been on a downward trajectory amid fears that the group's profit margins could worsen.

In recent weeks, dealers have reported the presence of a large short position in Northern Rock as traders bet that the company's shares can only fall further as the mortgage market deteriorates. But should Northern Rock come out with a strong set of figures and robust outlook statement, investors can expect a rush by short sellers to close their positions and lock in profits. Credit Suisse First Boston predicts that first-half pre-tax profits at the group will fall to £200m from £210m.

Results: Full year - None. Interims - CSR; Northern Rock.

WEDNESDAY: Full-year results from Stanley Leisure are likely to be overshadowed by the uncertainty about the exact effects on the group of the proposed deregulation of the gaming industry. Last week, Citigroup was heard arguing that the deregulation may not necessarily be a good thing for Stanley. It fears that the group will face a fiercely competitive post-reform environment and suggested that the company may have to embark on expensive new casino developments in order to stay in the game. The City will certainly be keen to hear the management's response to these worries. In terms of the pure financials, Williams de Broe forecasts profits at Stanley to be little changed on the £41m it achieved in 2003.

Results: Full year - Avocet Mining; Stanley Leisure. Interims - Cadbury Schweppes; Colt Telecom; Liberty International; Zetex.

THURSDAY: Probably the most interesting aspect of AstraZeneca's results will be evidence of how the company is getting on with the marketing of Crestor, its anti-cholesterol treatment. Williams de Broe fears that growth is being constrained by competition from rival products and predicts that this can only get worse with the imminent arrival on the market of yet another alternative to Crestor, a drug called Zetia.

Analysts will also want to hear what AZ's management thinks about a worrying trend faced by big pharma companies - that volume growth for branded medicines has been in sharp decline for the past three months.

Williams de Broe forecasts interim results from Capita to show strong growth. It predicts that profits at the support services group will jump to £64m from £51m thanks to the double-digit revenue growth the company is enjoying at present. As always, key for investors will be the rate at which Capita converts its pipeline of bids for various outsource projects into actual contracts.

Results: Full year - Renishaw; Misys. Interims - AstraZeneca; Autonomy; Capita Group; Egg; MFI Furniture.

FRIDAY: Results: Full year - none. Interims - Sportingbet.