Wednesday preview: US data, British American Tobacco in focus
By Alexander Bueso
Date: Tuesday 16 Feb 2021
(Sharecast News) - Financial markets' attention on Wednesday will be squarely on a raft of tier one economic reports due out in the US which will help them to take stock of how that economy is faring.
Included among those indicators are readings for homebuilding, industrial production, producer prices and retail sales.
Against that backdrop, investors will also be waiting for the release of the minutes of the US central bank's last policy meeting.
UK consumer price data for February will therefore take a backseat.
At 0700 GMT, the Office for National Statistics is expected to report a one tenth of a percentage point in headline and core consumer prices to 0.7% and 1.3%, respectively.
Commenting on the outlook for CPI inflation in the UK, analysts at Barclays Research predicted that prices rise only gradually through quarter one before jumping in April on base effects.
CPI was seen hovering slightly above Bank's 2.0% target over the remainder 2021 but settling back below target in 2022.
For British American Tobacco's 2020 full-year results, UBS's Nik Oliver has penciled-in an organic rate of sales growth of 3.6% with earnings per share ahead by 6.2% at constant exchange rates.
Looking out to 2021 meanwhile, the analysts projected organic topline growth of 6.7% with operating margins set to improve by 74 basis points.
Key to expectations for the latter would be British American's Next Generation Products, which the company believed hit bottom in 2020 in terms of its losses.
As BAT's position in NGP improved, Oliver expected the valuation premium versus Philip Morris to narrow.
BAT shares were changing hands on eight times its estimated earnings per share for 2021, against Philip Morris on 14 times.
As BAT pared its net debt to 2.9 earnings before interest, taxes, depreciation and amortisation, it would announce buybacks of £4bn, growing from 2022, he predicted.
Such a volume of share buiybacks would represent over 6% of the company's market value and take its total shareholder distributions to over 15%.
The valuation gap versus consumer stapes on 23 times their estimated 2021 EPS was also expected to narrow, the analyst added.
"We expect the gap vs staples to further unwind as US regulatory concerns unwind and BAT's superior top line and earnings power becomes clear."
Wednesday 17 February
INTERIMS
Transense Technologies
QUARTERLY PAYMENT DATE
Anglo Pacific Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Business Inventories (US) (15:00)
Capacity Utilisation (US) (14:15)
Industrial Production (US) (14:45)
MBA Mortgage Applications (US) (12:00)
Producer Price Index (US) (13:30)
Retail Sales (US) (13:30)
Wholesale Price Index (GER) (07:00)
FINALS
British American Tobacco, Plus500 Ltd (DI), Rio Tinto
EGMS
Conroy Gold & Natural Resources, Eqtec, Great Western Mining Corporation, Karelian Diamond Resources
AGMS
JPMorgan Asia Growth & Income, KKV Secured Loan Fund Limited NPV
UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (07:00)
Producer Price Index (07:00)
Retail Price Index (07:00)
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