Thursday preview: Brexit debate, AstraZeneca, Micro Focus
MPs are expected to hold a passionate Valentine's Day debate on Brexit, while investors will first be perusing report cards from the likes of AstraZeneca, Ashmore, Indivior, Lancashire, Micro Focus and Moneysupermarket.
Following Theresa May's status update on her Brexit negotiations earlier in the week, the House of Commons will debate whether to support the Prime Minister's continuing renegotiation over the future of the Northern Ireland border and associated backstop agreement.
There are several amendments being put forward for the speaker to choose, with voting to begin at 1900 GMT, but none of them are binding. If the main motion is not carried it would undermine May's negotiations, however.
In economic data, an update on China's foreign trade is due out on Thursday, along with German and eurozone GDP, the RICS house price survey and US retail sales and factory gate price data.
Among the reporting companies, AstraZeneca will announce fourth-quarter and final results, with consensus estimates for the fourth quarter pointing to total revenues of $6.33bn, core operating profit of $2.4bn and core EPS of $1.49.
"AstraZeneca's management is shifting focus from top-line momentum to profitability aiming for the industry norm of 30% around 2020," pointed out UBS. "Underlying short-term margin developments will be a focus as it will indicate achievability of this target."
UBS analysts will be looking closely at the recent launches, in particular Tagrisso, Lynparza and Imfinzi, where consensus forecasts are for $557m, $191m and $219m respectively.
Deutsche Bank predicted fourth-quarter growth will slow modestly versus the third but that the drug giant will "comfortably" meet its EPS guidance of $3.30-3.50.
DB analysts predict 2019 guidance will encompass "mid-to-high single digit" product sales growth at constant exchange rates with "strong" operating margin leverage partly offset by lower externalisation revenues.
"The key swing factor to this is the pace of uptake of European/ROW launches of Imfinzi/Tagrisso/Lynparza in new indications. We expect strong underlying operating margin leverage given that ongoing launches will require limited additional investment and R&D cost pressures have eased given budget freed from several large clinical programmes coming to completion."
Micro Focus will report full year results following its more upbeat update in November after losing around two thirds of its value earlier last year after a profit warning in March, on the back of hiccups with the integration of HP Enterprise Software.
The November update revealed trading had been "around the better end of the guidance of -6% to -9% for the 12 months to 31 October 2018" and consistent with "adjusted EBITDA margin guidance of approximately 37% at the midpoint of that revenue range".
USB analysts think the focal point of Thursday's results will be on "what management says in relation to progress in resolving the IT and salesforce attrition issues that have affected the group since the merger with HPE Software was concluded".
In terms of the outlook for 2019, the analysts believe guidance for declines of 4-6% or 3-5% in sales are "probably priced-in", with an EBITDA margin in the low 40s.
Thursday February 14
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Business Inventories (US) (15:00)
GDP (Preliminary) (EU) (10:00)
GDP (Preliminary) (GER) (07:00)
Producer Price Index (US) (13:30)
Retail Sales (US) (15:00)
UK ECONOMIC ANNOUNCEMENTS
RICS Housing Market Survey (00:01)
FINALS
AstraZeneca, Attraqt Group, Coca-Cola HBC AG (CDI), Convatec Group, Indivior, Lancashire Holdings Limited, Micro Focus International, Moneysupermarket.com Group, Trifast
INTERIMS
Ashmore Group, Grit Real Estate Income Group Limited NPV (DI), MJ Gleeson
Q1
Safestore Holdings
EGMS
Aquis Exchange
AGMS
Aquis Exchange, Chrysalis VCT, GCP Infrastructure Investments Ltd, MXC Capital, Paragon Banking Group, Stock Spirits Group , Watkin Jones
TRADING ANNOUNCEMENTS
Safestore Holdings, Trifast, UK Commercial Property Reit Limited
FINAL DIVIDEND PAYMENT DATE
Cardiff Property, Euromoney Institutional Investor, On The Beach Group
FINAL EX-DIVIDEND DATE
Avon Rubber, Henderson Opportunities Trust, Low & Bonar, Sanderson Group, Tharisa (DI)
INTERIM EX-DIVIDEND DATE
Coral Products, Gateley (Holdings) , Hargreaves Lansdown, Henderson Smaller Companies Inv Trust, Knights Group Holdings , Mattioli Woods, Mountview Estates, Puma VCT 10 , PZ Cussons, Quiz, Rank Group, TheWorks.Co.Uk, Triple Point Vct 2011 A, Van Elle Holdings, Yew Grove Reit
QUARTERLY PAYMENT DATE
Anglo Pacific Group
QUARTERLY EX-DIVIDEND DATE
BP, MedicX Fund Ltd., Raven Property Group Limited Cum Red Pref, Royal Dutch Shell 'A', Royal Dutch Shell 'B', The Renewables Infrastructure Group Limited, Unilever