The week ahead: Royal Mail, Burberry

Monday 16 January

Trading Statement

Rio Tinto, Ashmore

AGM/EGM

Kennedy Ventures, Funding Circle SME Income Fund

Tuesday 17 January

Trading Statement

Elegant Hotels Group, Cairn Energy, Sinclair IS Pharma

AGM/EGM

Wednesday 18 January

Third-quarter retail sales from luxury coats-to-handbags marque Burberry could be the latest in a spate of triumphant results from retailers.

So thinks Barclays analyst Julian Easthope, anyway, who's just upgraded Burberry to 'overweight' from 'equal weight' and bumped up his price target by 21% from 1,450p to 1,760p. That implies 12% of upside from here.

"We believe the company offers good value at a 15% discount to the luxury sector, which we see as unjustified given its well laid-out strategy to drive store density in the medium term," explains Easthope.

In the shorter term, meanwhile, a new CFO and CEO due in the coming months should "generate positive momentum", while a cost-cutting programme is set to save at least £100 million. Foreign exchange (FX) tailwinds should be worth £115 million this year and another £40 million in 2018.

And, since Chinese consumers account for 40% of Burberry's global sales, the reported positive buzz on Chinese social media about the brand's recent tie-up with actor Kris Wu can only be good news.

While Wednesday's numbers shouldn't be a serious catalyst, according to Easthope, they ought to be steady; expect like-for-like third-quarter sales up 2%, he says.

Adding in 2% for new retail space and 21% in FX benefits, total sales for the quarter should hit £752 million, reckons the analyst - up 25%.

"This implies a robust quarter that we believe is justified given the exposure to UK (circa 10% sales), China (circa 10%) Korea (circa 8%) and Asia ex HK generally."

Trading Statement

Experian, Hochschild Mining, JD Wetherspoon, Diploma

AGM/EGM

Thursday 19 January

Royal Mail shareholders will be hoping Thursday's update shows positive parcel trade - about a third of group revenue - in late 2016 carrying on through the Christmas season. They'll also want further evidence of expansion of its GLS business overseas.

It's been all about Royal Mail's burdensome pension scheme for the past few weeks, with the company announcing it will begin a consultation with employees regarding the closure of its hugely expensive defined benefit pension scheme in April 2018.

The current annual cost of £400 million is expected to swell to over £1 billion in just a few years. Clearly, workers are furious and threatening strikes. UBS analysts think current proposals - to move all current members to a Defined Contribution scheme plus a one-off £750 payment - would add £30 million to its cashflow estimates for 2019.

However, this is early days, and this deal is unlikely to be the one eventually agreed.

Before Christmas, analysts at JP Morgan repeated their 'buy' rating and 600p price target. "We believe the current valuation more than adequately discounts related risks with our price target implying c30% upside potential despite an assumed additional £100 million cash outflow," they said.

Trading Statement

NCC, 1pm Workspace Group, Moneysupermarket.com, Pets At Home, Royal Mail, Halfords Group, Evraz, British Land

AGM/EGM

Axis Bank

Friday 20 January

Trading Statement

Close Brothers Group

AGM/EGM

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.