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Tuesday preview: Whitbread, Ocado, Retail Sales Monitor
Thu, 09 Feb, 2012
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Tuesday preview: Whitbread, Ocado, Retail Sales Monitor
Mon, 6 Sep 2010, 15:27:00
Costa Coffee and Premier Inn owner
Whitbread
issues an interim management statement on Tuesday covering its second quarter. Broker Panmure Gordon thinks "the risk to forecasts clearly lies on the upside given the strong momentum established in the first quarter, positive industry data points and competitor updates." Not surprisingly, given that strong endorsement, Panmure Gordon is a strong advocate of the shares. "Over the medium-term we expect that the arrival of Andy Harrison - who started as chief executive designate on Tuesday - will lead to further reshaping of the group. This may cause some concern in the market but we think short-term trading momentum currently outweighs the risk from any change in the strategic direction of the group," the broker said. "Since Whitbread updated the market on 3 June, industry data for hotels and restaurants has been very encouraging with regional RevPar [revenue per available room] up 1.3% in June and 5.6% in July. London RevPar was up 15.8% in June and 23.9% in July. The Coffer Peach Business Tracker reported 1.3% LFL [like for like] sales growth in pubs and restaurants during June and 1.9% LFL sales growth in July, whilst [the recent] update from The Restaurant Group suggested that consumer demand has strengthened further during August. As such we believe Whitbread is well placed to deliver another strong quarter of like for like sales growth," Panmure Gordon predicted. The recent flotation of loss-making grocery delivery firm
Ocado
has been described as one of the least successful in recent memory, but shares have perked up in the last week or so. The revival was sparked by some broker comment at the end of August. Goldman Sachs reckons the shares are worth 200p and HSBC would be a buyer all the way up to 190p. Cazenove plumped for a price target of 180p while USB thinks fair value is achieved at 167p, 13p below the price at which the shares floated. The question posed back in July by analyst Amisha Chohan at HB Markets, in a note entitled 'Is this valuation off its trolley?' still seems pertinent, however: 'How can a business delivering pre-tax losses of £25 million on revenues of £427 million be valued between £800 million to £1.2 billion?' Singer Capital Markets is predicting first quarter results from equipment rental group
Ashtead
will probably exceed market expectations. The group "has already signalled to the market that conditions in the US have improved considerably, a view that has been augmented by its three competitors in the period since," Singer notes. Singer's forecast for first quarter profit before tax is £7.4m, versus £8.8m in the corresponding quarter of last year. Only one other broker appears to have gone on record with a first quarter forecast and Singer notes that the other prediction is much lower than Singer's at £2.3m. "Confidence in the US economic recovery appears to be evaporating as several pieces of data have been less strong than forecast and this has prompted fears of a 'double dip'. However, we remain sceptical that the US will return to recession and believe that what we are likely to see is a lower growth, slower paced recovery," Singer said. "The AIA's Architectural Billings Index is still trending higher and its 'new projects enquiry' index jumped from 55.5 to 57.7 in June implying growth further out," the broker added. The
British Retail Consortium
's retail sales monitor for August is due out overnight and should show a reasonably healthy sales situation, given that the weather was good (by UK standards) last month. The CBI [Confederation of British Industry] has already released its distributive trades survey for August, which showed that the balance of retailers reporting that sales were up year-on-year climbed to a 40-month high of +35% from +33% in July and -5% in June," notes Dr. Howard Archer of I H S Global Insight. "We expect the BRC to report that total retail sales rose 3.1% year-on-year in August, while sales are expected to have increased 1.0% on a like-for-like basis (which strips out the effect of additional floor space)," Dr. Archer predicted. INTERIMS Charlemagne Capital, Globaltrans Investment GDR (Reg S), Hydro International, Metalrax Group, Ocado INTERNATIONAL ECONOMIC ANNOUNCEMENTS ABC Consumer Confidence (US) (22:00) Factory Orders (GER) (11:00) Target Interest Rate (JPN) GMS Framlington Innovative Growth Trust FINALS Abcam, Dechra Pharmaceuticals, Genus AGMS Ashtead Group, Daisy Group, DS Smith, Greene King, Hampson Industries, Midas Income & Growth Trust, Quintain Estates & Development, Sports Direct International UK ECONOMIC ANNOUNCEMENTS BRC Sales Monitor (00:01) Q1 Ashtead Group IMSS Whitbread
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