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Market Overview: It's been a strong week for the FTSE 100, with big gains following US President Donald Trump's decision on Tuesday to withdraw from the Iran nuclear deal, which casued oil prices to spike higher on supply fears.
Stocks To Watch: The FTSE is in the midst of earnings season and three stocks in particular have caught our eye that are set to report figures this week.
Tuesday 15th May sees both Vodafone (VOD) and Easyjet (EZJ) report numbers.
Vodafone will release Q4 numbers and we expect a keen level of interest. The share price has been varied over the last six months to say the least, with prices ranging from £1.90 - £2.40 during this period. We’ve seen lots of news for VOD shareholders to digest, from disposals, proposed acquisitions and, of course, the securing of a spectrum for 5G mobile services in an auction that raised almost £1.4bn for the UK government. The auction, held by Ofcom, the communications regulator, offered spectrum in two frequency bands: 2.3 GHz, which is for current mobile phones, and 3.4 GHz - one of the bands intended for 5G, the next wave of mobile technology. VOD spent £378.2m on 50 MHz of 3.4 GHz spectrum. It said it would use spectrum for applications including connected vehicles and robotics, industrial automated systems and virtual and augmented reality. We expect a lot of interest in the announcement on Tuesday.
Easyjet will also update the market with Q2 earnings and revenue figures. The travel sector has been particularly strong in recent trading, even against a backdrop of rising oil, which is surprising. EZJ has been essentially trading within a range between £15.45 and £17 per share since late January this year, which marks their two year high (with all time-highs at £19.29 back in early 2015). EZJ appears to be impressing brokers with corporate actions over the last few months, as news ranged from potential stake acquisition as part of a consortium (within the newly restructured Alitalia), to increased passenger numbers again, which has in turn led to further upgrades over the last two months. Price targets issued in April and May range from £18 to £20.50. Again, we expect keen interest in the perceived star of the sector.
Finally, we look forward to Wednesday 16th May, when fashion house Burberry (BRBY) are due to report Q4 earnings. Burberry is another stock that has had its fair share of news for shareholders to mull over. Having had a big fall on the back of Q3 figures in mid-January 18, as retail sales fell 2%, sparking a sell off from circa £17 to £15 per share. We saw a recovery through March and April however, with BRBY hitting six month highs of £18.84 on the 8th May 18. BRBY then got hit with another sucker punch as Groupe Bruxelles Lambert (the holding company of Belgian billionaire Albert Frere) sold its entire 6.6% stake in the group. GBL sold 27.6m shares in a placing managed by Goldman Sachs, raising around £498m. The share price dropped around £1.50 over the following sessions. That said, brokers appear to remain optimistic, as April and May saw ratings such as hold, outperform and even a conviction buy from Goldman Sachs, with a guide price of £23.95. We expect renewed focus on BRBY on Wednesday.
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