Next week on the stock market

Direct Line has been struggling to find its footing in recent years. A potential takeover by Ageas has been a catalyst for rerating in the past month. But there’s still plenty hanging in the balance. The Board has rejected two proposals so far - both for a part cash, part stock deal. Investors will be keen to hear thoughts from management and details on ‘further initiatives’ supposedly coming next week.

Back to the day-to-day. Expect motor insurance price hikes to dominate headlines and commentary from the new CEO should point to improving insurance margins over the year. But Direct Line was slower to raise prices than the wider market which means it’ll take longer to feel the benefits than peers. There’s still a long way to go if Direct Line wants to return a stable dividend and restore investor confidence. In the meantime, the valuation is being supported by deal speculation, always a risky spot to be in.

Next gave investors plenty to be happy about in their last update, with growth of 9.1% in its Online channel helping sales to exceed group forecasts. While it may be winning the online race, the retail sector remains a tough place to operate. And with a history of under-promising and over-delivering, markets have come to have high expectations.

In next week’s results, Next are looking to achieve £4.78bn in full price sales, up 4.0% on last year. Improved full-price sales means profits will be in focus too. Next increased its full-year pre-tax profit guidance by £20mn to £905mn, which looks achievable in our eyes.

JD Wetherspoon has already flagged that sales were robust in the first half of its financial year, up 10.1% on a like-for-like basis. In next week’s half-year results, the group chaired by Tim Martin will reveal whether it’s managed to squeeze higher margins out of the increased pub takings. Whilst Wetherspoon has noted falling inflation, labour and energy costs have been called out as areas of concern.

The Chancellor’s budget was a mixed bag for the sector, so Wetherspoon will have to continue to rely largely upon operational efficiency to keep delivering the value offer that’s helped it grow its market share. The market will also be looking to see if the encouraging sales momentum seen late in the first half has continued in current trading.