AstraZeneca and Royal Bank of Scotland on the cards for Valentines Day

This week ends on Valentines Day with FTSE 100 constituents AstraZeneca PLC (LON:AZN) and Royal Bank of Scotland Group PLC (LON:RBS) posting their full-year results.

The drugs behemoth is likely to receive some love from the market, a week after blue-chip competitor GlaxoSmithKline PLC (LON:GSK) disappointed investors with its numbers and outlook for the new year.

The Anglo-Swedish pharma firm has been churning out mostly encouraging updates on its medicines for some time, all part of chief executive Pascal Soriots focus in recent years on replenishing its drugs pipeline.

It now has 164 treatments in various trial stages across its three core areas of oncology, cardiovascular, renal and metabolism (CVRM) and respiratory, which allowed the FTSE 100-listed firm to raise its 2019 sales growth outlook twice last year.

Investors revenue focus will be on its lead cancer treatments Tagrisso, Lynparza and Imfinzi, expected to post sales of US$925mln, US$359mln and US$456mln respectively.

AstraZeneca should meet the upper end of its guidance, said analysts at Deutsche Bank, reckoning management are likely to guide to high single to low double-digit product sales growth at constant exchange rates for 2020, with core EPS of $4.00-4.20, implying 10-20% growth.

The dividend is expected to remain unchanged from 2018 at US$2.80 for both 2019 and 2020.

“AstraZenecas policy is to maintain or grow its dividend although some analysts do point out that earnings per share only cover the forecast dividend payment by 1.50 times, which is a bit lower than ideal,” said Russ Mould at AJ Bell.

“In addition, free cash flow cover is skinnier still so it would be nice to see growth here to give scope for dividend growth or even to make sure the current forecast payment is totally safe in the event of any unexpected setbacks.”

The company should also comment on the coronavirus, since it has a huge presence in China with around 16,000 people employed in the country.

Soriot recently said the company had “plans for this kind of event”.

A rose for RBS

Royal Bank of Scotlands results will be the first to be delivered by the lender's new chief executive Alison Rose.

Rose took up the role in October, having been promoted from CEO of the groups commercial and private banking division, and she will let the market know whether the disappointing third quarter before she took over was more of a glitch or a trend, following a strong performance in the first half of the year.

The third quarter saw the 62.4% taxpayer-owned bank set aside an additional charge of £900mln, while both net interest income and net interest margin (NIM) both contracted, while the bank's cost:income ratio spiked to 93%.

This, according to Richard Hunter at Interactive Investor, undid some of the earlier progress made on costs, while the payment protection insurance (PPI) mis-selling provision put a dent in the bank's capital cushion, which fell to 15.7%.

“Total income was 20% lower year-on-year (and 29% lower quarter-on quarter), with NatWest Markets having had a particularly challenging time amid market volatiliRead More – Source

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