Week Ahead - Local and International Releases Slowdown

  • Market Overview

In South Africa, company releases are expected to taper down next week:

  • Ascendis Health (JO: ASCJ ) (Interim Results): The group is expected to report a normalised headline loss per share from total operations between 0.6 cents and 0.7 cents compared to earnings of 38 cents in the prior period. Revenue from continuing operations is expected to increase by 31% to 34% with normalised EBITDA expanding between 46% to 53%. Operating profit, however, was negatively impacted by impairments (R246 million), the limitation of the deferred tax asset balances of certain entities (R99 million), the significant impact of the 10% PIK interest margin on the group’s secured debt facilities contributing to net finance costs more than doubling to R545 million, as well as transaction-related and restructuring costs (R118 million).
  • From a corporate actions perspective, Tuesday marks the last day to trade FirstRand (JO: FSRJ ), Metrofile Holdings (JO: MFLJ ), (JO: PPRJ ), Royal Bafokeng Platinum (JO: RBPCBe ), South Ocean Holdings (JO: SOHJ ), Trellidor Holdings Ltd (JO: TRLJ ) and Hammerson PLC (JO: HMNJ ) to receive their most recently declared distribution. Adcorp (JO: ADRJ ) and Stellar Capital Partners (JO: SCPJ ) will host GMs in the upcoming week.

US earnings releases have also slowed down significantly. For 1Q21, the S&P 500 is estimated to deliver an earnings growth rate of 22.6%. As of last week, eight sectors have higher earnings growth rates or smaller earnings declines (compared to 31 December) due to upward revisions to EPS estimates.

  • PVH Corp(NYSE: PVH ) (NYSE: PVH ), which houses Calvin Klein, Tommy Hilfiger and Olga, will publish 4Q20 results next week. During 3Q20 results, the company forecast that 4Q20 revenue and earnings will continue to be negatively impacted by the Covid-19 pandemic. Although there is uncertainty due to resurgences throughout Europe and North America, PVH Corp currently expects 4Q20 revenue to decline approximately 20% y/y.
  • Bloomberg expects Walgreens Boots (NASDAQ: WBA ) Alliance’s 2Q21 earnings to decrease 26.2% y/y amid a challenging industry backdrop marked by reimbursement pressure. The company is renewing its focus on its pharmacies without Alliance, though it will take time for new ventures, such as VillageMD, to move the needle. Partnerships with Humana (NYSE: HUM ), LabCorp, FedEx (NYSE: FDX ), and Kroger (NYSE: KR ) could gradually add upside once the environment normalises.
  • A less eventful week is also on the cards in Europe next week.
  • While Hennes & Mauritz AB (ST: HMb ), commonly known as H&M, is expected to report a loss of 0.68 cents in 2Q21, down 160% y/y, the company is poised for a recovery in clothing demand. Although the company made significant gains in digital participation, online-only retailers are gaining market share.

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