Next week on the stock market

Among FTSE 100, FTSE 250 and selected other companies scheduled to report next week:

• easyJet may update capacity guidance for next year
• Halfords should let us know its forecast for the net effect of lockdown 2.0
• Experian is expected to show revenue growth, but regulatory costs are one to watch

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

*Companies on which we will be writing research.

easyJet – Sophie Lund-Yates, Equity Analyst

easyJet expects a pre-tax loss of between £815m and £845m for the full year, plus another £440m in exceptional items – mainly relating to ineffective fuel hedges. This is unpleasant, but investors have to focus on the long term.

At the time of writing, news of the Pfizer vaccine has given easyJet shares a shot in the arm. An effective vaccine could remove much of the risk that next summer would be similarly disrupted, thus showing clear light at the end of the tunnel. This is undeniably good news, but investors should remember not to count their chickens before they’ve hatched – there’s still a chance we end up disappointed.

Given that risk, investors should still pay close attention to easyJet’s plans for the winter, as well as for any forward guidance for the spring. At the moment the group plans to fly around 25% of planned capacity in Q1, but any updates would be of interest.

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Halfords – Sophie Lund-Yates, Equity Analyst

A trading update at the start of October means we know a lot of what to expect in Halfords’ half year results. Like-for-like sales will be in positive territory, and pre-tax profits are going to be higher than initially expected at over £55m. That’s thanks to strong cycling demand and good post-lockdown trading.

The question now is whether those trends have continued, particularly in cycling. On the one hand chatter about lockdown 2.0 in England is probably a tailwind, but that may have been cancelled out by the traditional drop off in sales as winter approaches.

With new restrictions in place across England, the outlook statement will also be worth looking at. Halfords has put a lot of leg work into building out its online business, which now accounts for over half of sales. We’d like to know what management thinks the net effect of the second lockdown will be for the income statement and balance sheet, with improved digital capacity potentially offering a bit of a buffer. The group previously said it remains cautious about the second half, with second waves of Covid-19 and Brexit both having the potential to disrupt progress.

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Experian – Nicholas Hyett, Equity Analyst

While Experian is expanding its data mining expertise out into automotive and healthcare, loan decisions are still very much the group’s bread and butter. That can be problematic in an economic downturn. Banks tend to be reluctant to make loans when there’s a higher chance they won’t get paid back.

However, the group has performed better than even management had hoped – delivering revenue growth where guidance had been for sales to slide by up to 5%. That outperformance is largely thanks to a stronger US mortgage market, which bodes well for the future and is clear evidence of the increased importance of data sets, like Experian’s, in decision making.

However, recent months have also highlighted the risks involved in handling sensitive data. A recent ruling by the UK Information Commissioner’s Office found Experian was in breach of GDPR rules in its UK marketing businesses. That could incur considerable fines if not resolved, and is an illustration of the increased complexity involved in holding large quantities of data. Historically we think the extra costs that this entails has held back margins – something to watch for in this set of results.

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HL’s Independent Non-Executive director, Moni Mannings, is also a Non-Executive Director of easyJet plc.

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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