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The FTSE 350 next week

18 April 2019

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

It’s a mix of boring Brits and flashy Americans reporting after Easter, as banking and pharmaceuticals giants vie with tech titans for the limelight. I’m sure readers will be pleased to hear that Brexit takes a backseat too – for most of these global companies it’s an irritating distraction at best.

Among the stocks we’ll be covering;

  • Margins take centre stage at Tesla
  • Barclays looks to fend off activist Edward Bramson
  • AstraZeneca investors will be hoping the group has turned the corner

FTSE 350 and selected other stocks reporting next week

22-Apr
Bank Holiday
23-Apr
Coke* Q1 Trading Statement
Snap* Q1 Trading Statement
Verizon* Q1 Trading Statement
24-Apr
Associated British Food* Half Year Results
Boohoo.com* Full Year Results
Centamin Q1 Trading Statement
CRH Q1 Trading Statement
Facebook* Q1 Trading Statement
Heineken* Q1 Trading Statement
Microsoft* Q3 Trading Statement
Tesla* Q1 Trading Statement
Visa* Half Year Results
25-Apr
Acacia Mining Q1 Trading Statement
Amazon* Q1 Trading Statement
Anglo American Q1 Production Report
Barclays* Q1 Trading Statement
Cobham Trading Statement
Ferrexpo Full Year Results
KAZ Minerals Q1 Production Report
Meggitt Q1 Trading Statement
RDI REIT Half Year Results
RELX Q1 Trading Statement
Senior Q1 Trading Statement
Synthomer Q1 Trading Statement
Taylor Wimpey* Q1 Trading Statement
Tullow Oil* Q1 Trading Statement
26-Apr
AstraZeneca* Q1 Trading Statement
Computacenter Q1 Trading Statement
Hastings Q1 Trading Statement
Pearson* Q1 Trading Statement
Rotork Q1 Trading Statement
Royal Bank of Scotland* Q1 Interim Management Statement
WPP* Q1 Trading Statement

*Companies on which we will be writing research.

Tesla

Tesla’s first quarter results are all about margins.

We already know production and delivery numbers were substantially lower than hoped for, despite Tesla cutting prices. The shortfall was driven by a slowdown in sales of the higher priced Model X and S. And with Model 3 prices substantially lower, margins could be under serious pressure this quarter – with negative consequences for profits.

With around 10,000 cars in transit at the end of the quarter, working capital demands have increased, and that’s likely to have dented cash flow as well. That might explain the volte-face on closing Tesla sales outlets. Terminating store leases early and making redundancies costs money up front, and if cash is proving tight, pushing the expense down the road makes sense.

Despite two successive quarters of better than expected numbers, Tesla still needs to prove the core business is stable and sustainable.

Tesla factsheet, including share prices, charts & research

Register for updates on Tesla

Barclays

Barclays investment bank remains the scene of skirmishes with activist shareholder Edward Bramson, who would like to see the business shrink. With Bank of America reporting choppy conditions in its investment banking and trading business, and JP Morgan warning about a “high teens” percentage fall in trading revenues, Q1 results could prove another stick with which Bramson can beat the Barclays board.

The other factors to keep an eye on will be familiar, but they’re no less important for that. With UK employment looking strong, we’d hope losses from bad loans remain minimal. Continued cost control will be key to improving net interest margins (the difference between what a bank pays on deposits and charges on loans) and is likely to place a heavy focus on digitisation of the bank’s services.

With charges for historic misdemeanours largely behind it, 2019 should represent something of a clean start for Barclays. We’ll find out on Thursday if it’s made the most of the opportunity.

Barclays factsheet, including share prices, charts & research

Register for updates on Barclays

AstraZeneca

All being well, Friday’s numbers will show AstraZeneca has turned the corner.

Legacy products, which have lost patent protection, make up an ever decreasing portion of total sales. With the sale of the group’s new drugs building up a head of steam, revenue growth is expected to turn positive this year for the first time since 2014.

Growth is being driven by the oncology portfolio, and recent investments mean that will hopefully continue for some years to come. Lung cancer treatment Tagrisso has been the stand out performer so far. That will continue this quarter but we’d expect an increasing contribution from newer additions Imfinzi and Lynparza as they mature.

However, the real focus will be on cash. Even after the raising $3.5bn, debts remain considerable and the commitment to sustaining the dividend means demands on cash are substantial. Astra needs to start converting revenues into cash in the bank if it’s to grow returns to shareholders in the future.

AstraZeneca factsheet, including share prices, charts & research

Register for updates on AstraZeneca

Unless otherwise stated estimates are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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Investment notes
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

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