Next week on the stock market

Among the companies reporting next week;

• Intertek looks to make the most of a tough year.
• DS Smith could report a brighter outlook for its key North European markets.
• Vistry's strong second half could outweigh a poor performance during the first lockdown.

FTSE 100, FTSE 250 and selected other stocks scheduled to report next week

*Companies on which we will be writing research.

Intertek – Nicholas Hyett, Equity Analyst

Intertek’s actually struggled more than we might have expected this year, with revenues falling 7.3% in the first three quarters.

The testing and quality assurance group provides crucial services to the natural resources sector, and in manufacturing and in trade. All three have been hit hard by the economic disruption caused by coronavirus – although sales trends have improved after hitting a low in May/June last year.

Management’s guidance for a mid-single digit decline in full year sales suggests a further improvement in the final quarter. We would consider that a positive result given the increased restrictions on global economies. Together with a balance sheet that looks set to be stronger at the end of 2020 than it was at the end of 2019 – that might help investors look back on 2020 as a difficult but ultimately successful year.

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DS Smith – Sophie Lund-Yates, Equity Analyst

DS Smith’s revenues and profits have been hurt by the pandemic. It has exposure to the industrial and hospitality sectors, which together with pressure on pricing meant pre-tax profit fell 55% to £97m in the first half. And it’s pricing we’ll be focussing on next week.

Trends started to improve in the second quarter. But since then much of the world re-entered lockdowns, which could re-apply pressure. That would put a lid on revenues. It also makes the outlook statement an important read. There’s a glimmer of light at the end of the lockdown tunnel, as vaccine roll outs gather pace in key North European markets (39.7% of revenue). That means we might hear more positive expectations for trading in the final quarter.

We’ll also be paying close attention to the resilience of DS Smith’s other customers. It has exposure to e-commerce, consumer and food groups. These have held up well during the pandemic, and we have no reason to suspect this trend has changed. We’ll be interested to see how well they’ve fared in the third quarter.

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Vistry – Sophie Lund-Yates, Equity Analyst

The third national lockdown had no material impact on Vistry’s performance in the second half. The group’s underlying sales rate rose 20% during the final 6 weeks of the year. That suggests Vistry could make good on its forecast for full-year pre-tax profits of roughly £140m. Provided there are no unexpected knocks to trading, Vistry is also expected to announce a “modest” final dividend.

However, we could see the group’s full-year private sales rate normalise. This rose to 0.62 homes per outlet, per week in the second half. That’s because second-half performance was likely boosted by pent up demand from the first lockdown.

Still, management has been optimistic about its prospects for 2021. It’s expecting completions to remain strong despite challenges related to the revamped Help to Buy scheme and the uncertainty surrounding the duration of the nation’s Stamp Duty Holiday. We’re keen to see how much progress has been made on completions so far this year.

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Unless otherwise stated estimates are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments and income they produce can 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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