Next week on the stock market

Among those currently scheduled to release results next week:

• Can Severn Trent's fortunes remain buoyant?
• Will earnings momentum continue for GSK?
• What will job cuts at McDonald's mean for the bottom line?

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

*Events on which we will be updating investors.

Severn Trent – Derren Nathan, Head of Equity Research

Next week, Severn Trent’s trading statement is unlikely to reveal any major spanners in the works. The UK-based water utility company saw revenues rise 10.8% in the first half of the year, and is expecting full year revenues to come in at around £2bn. Its strong market position coupled with a regulatory pricing framework provides a level of stability to revenues - a great quality to possess when times get tough.

But these robust revenues come with a caveat. The prices Severn Trent can charge for its services are restricted by the current regulatory regime. This limits financial returns and sets challenging performance targets for earning additional rewards.

While current investments in infrastructure and operational improvements could pave the way to make more profit in the future, they’re likely to put pressure on near-term margins. That’s why we’re keen to hear how well costs are being controlled, and next week’s update should shed some light on that situation.

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GSK – Derren Nathan, Head of Equity Research

In next week’s fourth quarter results we’ll be looking to see if GSK can continue its recent run of beating analyst estimates. As a whole, underlying profit for the year is expected to outpace the group’s own goal of 10% annual growth out to 2026. We’ll be looking out to see how confident GSK is of making that same target in 2023.

In the clinic, the final quarter of 2022 was a mixed bag for GSK’s pipeline. Following disappointing trial results, GSK pulled its myeloma therapy Blenrep from the US market, but it’s too early to write the drug off just yet, with two differently designed trials still ongoing. Elsewhere, progress towards regulatory approval for momelotinib, for the treatment of the rare blood cancer myelofibrosis continues. Decisions from both the US and European authorities are expected this year.

Vaccines, in particular the Shingrix vaccine for Shingles, have been a strong growth driver of late and we hope to see that momentum continue. The Board have high hopes for its respiratory syncytial virus (RSV) older adult vaccine, which is pending regulatory approval. But GSK is not the only contender here, with Moderna the latest to release compelling data for its candidate.

The market responded favourably to a December ruling in GSK’s favour in the Zantac litigation and we will be looking out for any assurance the company can give on other claims.

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McDonald’s – Derren Nathan, Head of Equity Research

We will soon find out if the near double-digit like-for-like sales growth seen in McDonalds’ Q3 results will repeat in the final quarter of the year. The burger giant has been able to push through price rises in its major markets, despite the ongoing cost of living crisis. And analyst earnings expectations have been creeping up marginally since McDonald’s last reported numbers.

Whilst this is impressive, inflation has been weighing on profits. This may well have been the cue for CEO Chris Kempczinski’s recent letter to employees, signalling a programme of corporate job cuts. We’ll be looking out for more detail on this and what the effect will be on the bottom line.

Given its global reach, McDonald’s can’t escape wider geopolitical forces. It’s missing a chunk of revenue following restaurant closures in Russia and Ukraine, and the conflict has caused disruption to other operations in the region, notably leading to recent closures of restaurants in Kazakhstan. The relaxation of COVID-19 restrictions in China will be more welcome news to investors, and we will wait to see if this acts as a catalyst to refresh its openings programme.

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