Stock Watch: 29 Jan - 2 Feb 2018

Emma-Lou Montgomery
Emma-Lou Montgomery
Fidelity Personal Investing26 January 2018

Expect to hear about the Brexit effect when recruitment agency SThree (STHR) posts its full-year results on Monday. A year on from the Brexit vote SThree, which provides specialist recruitment services in the science, technology, engineering and mathematics (STEM) industries, said the slowdown in hiring activity in the UK was weighing heavily on the market for City investment banking jobs.

It wasn’t alone then and it’s not alone now. According to the CBI/PwC Financial Services Survey just released, optimism in the financial services sector fell for the third consecutive quarter in 2017 in the three months to December,

While Brexit uncertainty still hangs heavily over the City of London, it will be interesting to see how the group has fared overall. Around 80% of its profits have typically been generated outside the UK and Ireland, from Europe and the US.

The collapse of Monarch and Air Berlin brought the potential fragility of Europe-based airlines in an over-crowded market to the forefront. So all eyes will be on Flybe Group (FLYB) which is due to give its trading update on Wednesday.

Back in October shares in the Exeter-based budget airline group fell 20% after it posted its second profit warning in a year. Blaming an over-supplied European market, it said first-half pre-tax profits would be in the range of £5 million to £10 million, down from a consensus estimate of £15 million. This compares with a £15.9 million adjusted pre-tax profit a year ago.

Over supply doesn’t appear to be bothering Jozsef Varadi though. So it will interesting to hear more of his plans when his Budapest-based low-cost carrier, Wizz Air (WIZZ), posts Q3 results on Wednesday. Varadi intends to go from the current 87 or so aircraft Wizz operates, to around 250 after securing a multi-billion dollar aircraft order in November.

Calling the move away from the traditional sales and leaseback model and into aircraft ownership a “game changer”, he said the move would make Wizz even more competitive. And competition is the name of the game.

When the final jet from the order is delivered in 2026 there will be around 250 aircraft in the Wizz fleet and that will have the company snapping at rival easyJet’s tailfins, in terms of aircraft numbers.

But aircraft numbers and easyJet aren’t its only targets. It also has an eye on filling the gap left behind by Monarch and AirBerlin, with plans to cash-in on the growing number of central and eastern European travellers. That will put it in direct competition with Ryanair.

Wizz wants to increase its own capacity by 23% by the end of 2018 and one way it could do this is by bidding for the four aircraft spaces left empty by Monarch at London Luton airport, where Wizz Air opened a UK base last year. Each space would give it scope to add between 20 and 24 additional routes from the UK to Europe.

Analysts at Investec are forecasting full-year pre-tax profits of £261 million to March 2018, up from £207 million in 2017.

You may not have heard of AIM-quoted Angle (AGL), but that could be about to change if its Parsortix system, which measures cancer levels in later stage prostate cancer sufferers, becomes widely used.

With one in three people worldwide expected to develop some form of cancer in their lifetime and over 90% of deaths actually arising from secondary cancers, the race is on to find ways to stop cancers spreading.

This is where Angle’s Parsortix system comes in. It is designed to be a companion diagnostic for major pharmaceuticals companies in helping to identify patients that will benefit from particular drugs that stop, or at least slow, the metastasis.

As well as cancer, Angle says its technology has the potential to be with several other important cell types in the future.

Staying with biotech and the treatment of cancer, on Tuesday we get full-year results from Oxford BioDynamics (OBD).This is another AIM-listed biotech company that works on the discovery and development of biomarkers. Earlier this month it signed a second agreement with a major US biopharmaceutical company to extend its development of predictive biomarkers for immuno-oncology (IO) therapies. These work by equipping the body's immune system with the tools to kill cancer cells.

So far, Oxford BioDynamics has entered into four agreements to discover and develop predictive biomarkers for IO therapeutics - two with pharmaceutical companies, one with a major US healthcare concern and the latest agreement with a major US biopharmaceutical company.  Its shares have risen almost 35% in the past year.

Then on Friday we hear from pharmaceuticals giant AstraZeneca (AZN).Its full-year results will give us an update on its many medicines with the potential to generate big sales, as well as those which more bearish analysts place no value on in the immune-oncology pipeline. Something of a Marmite stock, fans remain convinced that at least one of its cancer drugs in the late stage of development will kick-start an earnings recovery. We’ll have to wait until Friday to see whether the bulls or the bears are right.

Key company announcements in the week ahead 

Monday

Petra Diamonds Ltd (PDL)

Yu Group (YU.)

Conviviality (CVR)

Porvair (PRV)

SThree (STHR)

Tuesday

Domino’s Pizza group (DOM)

Oxford Biodynamics (OBD)

Filtronic (FTC)

PZ Cussons (PZC)

Wednesday

Angle (AGL)

Best of the Best (BOTB)

Joules group (JOUL)

Wizz Air Holdings (WIZZ)

Flybe Group (FLYB)

Britvic (BVC)

SSE (SSE)

Thursday

Royal Dutch Shell (RDSA and RDSB)

Rank Group (RNK) AG Barr (BAG)

Glencore (GLEN)

3i Group (III)

Friday

BT group (BT.A)

AstraZeneca (AZN)

Gem Diamonds Ltd (GEMD)

 


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