The mid-point of the week will see two heavyweights from the pharmaceutical and retail sectors issue trading updates, GlaxoSmithKline and Next.
Aside from these two major releases, there is little filling the rest of the diary, although the UK BRC shop prices index and a CBI distributive trades survey may provide some macro flavour.
Vaccines under the microscope for GSK guidance
At its half-year results, the big pharma group kept its outlook for the current year of a 1-4% decline in core earnings per share (EPS) unchanged but this was contingent on a recovery in vaccination rates.
For the first half of 2020, the pandemic hit the number of vaccinations carried out by the group, leading to underlying EPS dropping 37% to 19.2p – even though statutory profits rose by 74% to £4.45bn due to gains on completion of the sales of certain consumer brands.
“We think recovery in US vaccination rates won’t be sufficient,” analysts at UBS said, with their estimates for third-quarter 2020 adjusted EPS of 30p in line with the City consensus.
Investors will also be eager for news on the vaccine developed with Sanofi, which should enter the late stage of trials in December if the Phase 1/ 2 started last month is successful.
Thank you; NEXT
The clothing retail bellwether tumbled to an interim loss but upped its full-year profit guidance as it benefited from much stronger online sales.
Investors will want to know how this trend has fared since August and whether boss Simon Wolfson remains confident of generating profits and cash and cutting debt even considering the economic hardship consumers are facing this winter.
Central guidance for the year was last set for a 59% fall in profit to £300mln on sales down 12%.
“The mid-range retail market is highly competitive though and, as consumers often trade down when times are hard, there is a risk that a long recession could see more customers turn to chains offering cheaper products like Primark on the high street and Boohoo online,” analysts at Hargreaves Lansdown noted.
“However Next has lots of innovations up its sleeve, that bode well for future growth.”
Significant announcements for Wednesday October 28:
Economic data: UK BRC shop prices index; CBI distributive trades index