Recruitment firm Michael Page is set to give an update on first quarter trading on Wednesday and broker Panmure Gordon reckons the mood will be sombre, given the prevailing economic environment.
"Trading may well have stabilised in markets such as the UK, though we remain more concerned that larger profit contributors such as EMEA [Europe, Middle East and Africa] and Asia Pacific are under increasing pressure," the broker predicts.
"We anticipate that any Q1 [first quarter] progress will be fairly limited given the like-for-like comparisons and the prevailing macro pressures," Panmure Gordon added.
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The broker, which rates the shares a "sell", notes that "while Michael Page remains well financed and remains better placed that most to grab any growth out there, previous engine-drivers such as EMEA and Asia Pacific are likely to be slowing."
"The market remains reticent both on a candidate and client level, and time to completion remains much longer than under normal market conditions as a result. We expect ongoing caution over 2012 as a result," the broker concluded.
The same broker expects few surprises from the interim results of another recruitment firm, Matchtech, given the firm's detailed trading update back at the beginning of February.
"The key focus is likely to be on full-year guidance, key client behaviour, debt reduction and dividend sustainability in our view," Panmure Gordon said.
"While the company stated it expected to trade in line with market expectations in February, this was aimed at the lower end of the range, with profits anticipated to be H2 [second half] weighted again given the timing and cost of headcount investment," Panmure Gordon noted. The broker rates the shares a "buy" and has a target price of 258p.
In the US, the first quarter results season is underway. German bank Baader thinks the first quarter announcements will see an upturn in the number of companies beating expectations versus those under-performing (i.e. the "beat ratio"), due to the string of robust economic data over the recent months.
"In addition sequential earnings expectations have been marked down significantly since the start of the year already. 1Q [first quarter] operating earnings have been revised down by roughly 1$ (i.e. close to 4%) and are now expected to come in more or less in line with the 4Q level," the bank notes.
"While this may send some reassuring signals, the outlook for the upcoming quarters may come under increasing scrutiny. Consensus expectations going for a steep increase from 2Q11 [second quarter 2011] until 4Q13 must be seen as far too optimistic," the bank argues.
"Therefore the outlook given by the companies during the earnings season may fall short of expectations. The upshot is that further markdowns to 2012 and 2013 earnings estimates must be expected over the next quarters. In this scenario consensus 12M FWD EPS [12-month forward earings per share] estimates may move largely sideways, continuing the trend seen since August last year, while providing little impetus for higher stock prices over the next few months," Baader concluded.
On the economic front, hard though it is to believe people could get excited about something called the Beige Book Survey, the publication from the US Federal Reserve will be closely pored over for clues over future Fed policy.
In the UK, the British Retail Consortium's Retail Sales Monitor will be out in the wee small hours. Market expectations are for March's index to be on a par with a year ago, which would represent an improvement on February, when the monitor showed a 0.3% year-on-year drop-off in sales.
INTERIM DIVIDEND PAYMENT DATE
Galliford Try, Hargreaves Lansdown, Haynes Publishing Group
INTERIM EX-DIVIDEND DATE
Manchester & London Inv Trust, Northamber, Thorpe (F.W.)
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Beige Book Fed Survey (US) (19:00)
Crude Oil Inventories (US) (15:30)
Import and Export Price Indexes (US) (13:30)
MBA Mortgage Applications (US) (12:00)
Treasury Budget Statement (US) (19:00)
Michael Page International
Altona Energy, INA-Industrija Nafte D.D. GDR (Reg S), VietNam Holding Ltd.
AFC Energy, Baronsmead VCT 3, Low Carbon Accelerator Ltd., Porvair
UK ECONOMIC ANNOUNCEMENTS
BRC Sales Monitor (00:00)
FINAL DIVIDEND PAYMENT DATE
CQS Rig Finance Fund Ltd., Manroy, Safestore Holdings
FINAL EX-DIVIDEND DATE
32Red, Berendsen, BG Group, Cenkos Securities, Charles Taylor Consulting, Chesnara, Communisis, Edinburgh UK Tracker Trust, EMIS Group, Filtrona PLC, Fisher (James) & Sons, Foreign and Colonial Inv Trust, Foresight 2 VCT, Foresight 2 VCT 'C' Shares, Fyffes, Goals Soccer Centres, IDOX, IMI, Kerry Group 'A' Shares, Logica, Merchants Trust, Mondi, Novae Group, Psion, Rotork, RPS Group, Smurfit Kappa Group, Ultra Electronics Holdings, Wood Group (John), WSP Group
X5 Retail Group NV GDR (Reg S)
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