Next week on the stock market

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

• Unilever will show how normalising sales trends are impacting the top line
• Verizon will tell us whether its US customers are back buying phones
• Barclays shares struggle in an increasingly tough environment

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

19-Oct
BHP Group	Q1 Operational Update

20-Oct
Bellway	Full Year Results
Netflix*	Q3 Results
Reckitt Benckiser*	Q3 Interim Management Statement
Softcat	Full Year Results

21-Oct
C&C Group	Half Year Results
Centamin	Q3 Production Report
Nestle*	Q3 Trading Statement
Quilter	Q3 Flow Update
Segro	Q3 Trading Statement
Verizon*	Q3 Results
William Hill*	Trading Statement

22-Oct
AJ Bell	Full Year Trading Statement
Coca-Cola Company*	Q3 Results
Moneysupermarket.com	Q3 Trading Statement
Rentokil Initial	Q3 Trading Statement
Spectris	Trading Statement
Travis Perkins	Q3 Trading Statement
Unilever*	Q3 Trading Statement

23-Oct
Airtel Africa	Half Year Results
Barclays*	Q3 Results
Essentra	Q3 Trading Statement
InterContinental Hotels Group*	Q3 Trading Statement
London Stock Exchange Group	Q3 Trading Statement

*Companies on which we will be writing research.

Unilever – Sophie Lund-Yates, Equity Analyst

We haven’t heard from Unilever since July, when it fared better than expected at the half year. Big increases in food and hygiene sales helped mitigate some of the impact from lost revenue in the catering sector and out-of-home eating.

As shopping trends return to normal, but restaurant eating is still subdued, we wonder what happened to sales in the third quarter. In particular we’ll be looking at how sales are doing in developed markets, which were sluggish before the outbreak and where we’re dubious about Unilever’s ability to propel long-term growth. Total underlying sales fell 0.1% in the half year, so this is what we’ll be benchmarking against.

The other piece of big news will be any details on the de-merger of the tea business. Household names like PG Tips are being sold in developed markets. This is to help the business become more streamlined, and any updates on progress would be well received.

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Verizon – Sophie Lund-Yates, Equity Analyst

Verizon’s weathered the pandemic pretty well so far. The internet is really an essential service, especially when many of us are working from home or just being bored from home during the pandemic. Hardware sales did take a hit during the lockdowns as in store sales were curtailed by social distancing measures, and it will be interesting to see whether sales have bounced back or even increased now that lockdown measures have been eased.

Service revenue also fell a little, mainly due to lower roaming charges, waived fees and pressure on small business customers. Verizon Media sales also fell thanks to lower advertising and search revenue.

Because of falling hardware sales and some increased costs management expects full year earnings per share growth to be broadly flat, having previously forecast low single digit growth. The situation has changed considerably in the last few months though, so we wouldn’t be surprised to see further revisions.

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Barclays – Nicholas Hyett, Equity Analyst

The coronavirus outbreak has hammered Barclays’ share price – down some 44.5% year-to-date and now trading on a price to book ratio of just 0.28. That reflects some very real worries about not just Barclays but the entire UK banking sector.

The most immediate challenge facing the industry is a rise in bad loans. In their first half results Barclays set aside £3.7bn, as the board expected rising unemployment and corporate bankruptcies to result in less of its loans being repaid. We don’t think the global economic picture has improved much since then and expect more provisions this quarter.

The other major headwind is falling interest rates and particularly the threat of rates going negative. With interest rates on savings accounts already at rock bottom, but lower central bank rates pushing down the rate banks can charge to borrowers, the bank’s ‘net interest margin’ (the difference between what the bank pays for funding and what it earns on loans) is set for a squeeze. That would fundamentally reduce profitability.

The good news is that Barclays’ sizeable investment banking business is less reliant on interest income. Volatile financial markets are good news for investment banks, since they mean more trading and hedging activity. The scary days of March are now behind us, volatility has remained high in the third quarter and that should help the bank’s trading desks. However, whether that will be enough to offset weakness in core banking activities remains to be seen.

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