The week ahead: Reckitt in spotlight for Suboxone story
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The owner of Durex condoms, Clearasil spot cream and Dettol cleaner would rather investors focus on its household brands than its pharmaceutical division – home of its troublesome opiate addiction treatment Suboxone.
The consumer goods-to-medicine company Reckitt Benckiser will update the market on its first-quarter with analysts expecting solid growth.
But the City will be more interested in what it has to say about its move from selling the Suboxone drug in tablet to film form and how the impact of generics in the market will affect it. Shore Capital says its pharmaceutical division "contains the big current unknown within Reckitt, the impact from the launch of the generic variants." The 30 per cent rise in the share price in the past year makes the shares look expensive, Shore's experts think, and it rates shares a Hold with a 4,610p price target.
Results/Updates: Reckitt Benckiser, Creston, Dillistone Group, Informa, TLA Worldwide.
Tomorrow
Carpetright might be able to roll out a decent trading update now that the UK housing market is showing signs of recovery. Analysts expect the pre-close numbers to show it is on track to deliver a full-year profit of £10m, ahead of the £4m of last year. But Canaccord Genuity's analysts think the "stock is highly valued" and although "profits may now be recovering" it is "difficult to see any more than a pedestrian rate of recovery." They rate the stock a Sell with a 500p price target.
Shopwatchers will also be looking out for the update from Primark-owner, Associated British Foods. Analysts at Citi last week added it to its list of "least-preferred" stocks – after the shares' 50 per cent rise over the past year. International business might be doing well but there have been some concerns raised about the pace of growth of its UK Primark business as well as its sugar division.
Results/Updates: ARM Holdings, Associated British Foods, Aveva, Carpetright, Dragon Oil, Foreign & Colonial, Lidco Group, Next Fifteen Communications, Premier Foods, Petropavlovsk, Segro, Snoozebox.
Wednesday
The City will be focusing on first-quarter results from Barclays and how chief executive Anthony Jenkins' strategic review and cost-cutting is working. But those with an interest in mid-cap stocks will take a look at set-top box-maker Pace. Analysts expect Pace's update to reveal a strong start to the year, benefiting from continued demand for media servers from its US customers. Nick James at Numis says momentum is building for its "new platforms disrupting the traditional set-top box market from Apple, Intel, Google and Microsoft". But without further indication of how this will grow Mr James rates the shares a Sell with a 160p price target.
Results/Updates: Barclays, Bumi, Computacenter, DS Smith, Elan, Fenner, GlaxoSmithKline, N Brown, Redrow, Reed Elsevier, Pace, Sports Direct, Standard Life, Talvivaara, Thorntons, UBM.
Thursday
There are growth concerns for insurer Admiral because of the ban on legal referral fees. But Numis thinks the most price-sensitive topic is claims patterns. Numis rates the stock as Reduce with a 1,040p price target.
Results/Updates: Admiral, Aer Lingus, AstraZeneca, British American Tobacco, Biome Technologies, Croda, Camellia, Cobham, Dialight, Huntsworth, Elementis, Go Ahead, Kazakhmys, Mecom, Playtech, Spirit Pub, St. James's Place, Taylor Wimpey, Unilever.
Friday
Sir Martin Sorrell's advertising giant WPP is expected to post organic growth of 2 per cent to £2.5bn for the first quarter. Numis' Paul Richards says WPP's balance sheet provides scope for good income. The payout ratio could rise to 50 per cent and he rates shares a Buy with a 1,270p target.
Results/Updates: Colt Group, Rotork, Ultra Electronics, WPP.
Economics Diary
Today US Existing Home Sales
Tomorrow UK Public Finances and Public Sector Net Borrowing, Confederation of British Industry Industrial Order Expectations and selling trends, US New Home Sales.
Wednesday Nationwide House Price index, British Bankers' Association Mortgage Approvals; Confederation of British Industry Realized Sales, US Core Durable Goods Orders, Crude Oil Inventories.
Thursday UK Preliminary GDP and US Unemployment Claims.
Friday KOF Economic Barometer – the GDP growth of Swiss economy, ECB M3 Money Supply, US Advance GDP.
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