Getting latest data loading
Home / Special Reports / UK Blue Chips: Which Will Perform Best?

Leveraged products involve a high level of risk and you can lose more than your original investment. They are not suitable for everyone so please ensure you understand the risks involved and if necessary please obtain investment advice from a financial adviser before investing. This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

25 July 2016

UK Blue Chips: Which Will Perform Best?

The UK’s Blue Chips Are Set to Report Q2 Earnings

US earnings season is in full swing and some of its biggest and best known companies have surpassed the expectations of both markets and analysts. It’s now time to start looking ahead to what we might expect from the UK’s own blue chip stocks. With the Brexit vote adding spice to things on our side of the pond, any potential surprises are sure to move markets considerably.

Expectations were low in the US, most notably in the banking sector which led to some solid beats and a realization that shares had been seriously undervalued beforehand. It’s a similar story for UK peers – the bar has been set low. Are UK blue chips similarly undervalued ahead of their earnings updates? With companies desperate to retain investor confidence in challenging times, the trading opportunities around UK results will be numerous.

In this exclusive report we’ll explain the strategies many of our clients use to trade UK stocks during earnings season, but we’ll also tell you the importance of past performance vs. future outlook and what both can mean for a company’s share price. Finally, we highlight four of the most important UK blue chip stocks: BP (BP.), ITV (ITV), Lloyds Banking Group (LLOY) and Taylor Wimpey (TW.). Are these companies setting themselves up to solidly beat market forecasts?

How do companies report their earnings?

The first thing to understand is that companies want to present their results in the most positive way possible. This involves all manner of potentially confusing terms. You likely know the difference between revenue and profit, but what about the difference between pre-tax profit and EBITDA? If you don’t, then don’t worry because our analysts do! We’ll break down the results for you, tell you exactly what’s going on and what that could mean for the share price.

The second thing to understand is that, when it comes to company results, the devil is all too often in the detail. What we mean by this is that the focus is not necessarily on how the company has performed to date. In fact, future outlook is almost always what traders and institutional investors jump on (or off!) – They are the people whose actions move share prices and they buy future growth, not past growth. This is a simple observation that means next time you see a company’s share price down 10% when it reported a 10% jump in profits, you’ll have a good idea why.

A sly little dividend?

Another little trick to please shareholders in light of poor earnings figures is for a company to increase its dividend, or announce a special dividend as did Lloyds Banking Group at its FY2015 results in February. This type of action involves the return of cash to loyal investors and will often see those who don’t already hold the shares snap them up pretty quickly – with the subsequent uptick in share price momentum quickly glossing over a sore set of numbers.

How Accendo will help you see through the mist

Our analysts pick apart company results when they come out, but we keep our eyes peeled in the run-up too. There was talk of Lloyds’ special dividend ahead of its FY2015 results announcement, but that didn’t make the news until after the results came out. The share price had already jumped by 16%. We’re here to make sure you’re abreast of all developments in the run-up to results day so that you know things before the journalists do. We have access to all previews and broker comments concerning virtually every European and US stock that’s traded on the major global exchanges.

Page: 01

Overstating the risks

While some recent macro data from the UK has indicated a negative impact from Brexit, Purchasing Managers’ Indices (PMI) are sentiment indicators whose readings are determined using surveys. Of course there’s uncertainty following the Brexit vote, and businesses are right to be less optimistic as a result. This lack of optimism is the same thing that led to expectations being so low – and so easily beaten – in the US in its latest round of earnings updates, and contrasts sharply with how the markets have actually performed since 23 June. In the US, equity indices have made numerous forays to fresh record highs while the FTSE100 has itself been in full recovery mode.

How to trade around results

Many investors, knowing full well the lengths to which a company will go to ensure its earnings report is taken positively by the markets, will buy ahead of results day looking to capitalise on the attractive share price move that potentially awaits. Others will wait until the information is made public, looking to react accordingly on the day should results impress or disappoint. In the latter case, a CFD can be used to go short (that is, sell) the shares in the expectation the price will fall. Remember (especially when buying or selling on the day) that the devil resides in the details! That’s what we’re here to help you with.

Will earnings season engineer a rebound by Brexit Laggards?

brexit laggards                  Source: Alpha Terminal, 22 Jul

The above table details about 1/5 of the FTSE100. These stocks and more are still trading up to 32% lower since the close on 23 June. Conspicuous in their presence are the banks/financials, travel stocks and house builders. Will the UK’s banks beat expectations just like their US counterparts have? Will markets see sense and realise that the UK still needs 300,000 new homes built every year?

Food for thought: Where sharp sell-offs turn out to be overdone, all it might take is a rose-tinted outlook or earnings beat that says ‘things aren’t as bad as we thought they would be’ in order to kick off some impressive recoveries. You can contact our trading floor to get the full list and myriad other metrics.

Now we’ll take a closer look at our top four Results Season picks: Taylor Wimpey, BP, Lloyds Banking Group and ITV.

Page: 02

Taylor Wimpey (TW.)

Taylor Wimpey PLC (-)

Will shares fall back towards 100p lows or rally towards 210p highs?

Taylor Wimpey (TW.) is one of the leading UK house builders and, like its peers, has seen its share price hit hard by the Brexit vote amid concerns UK house prices could now fall by 20%. Its results announcement will be scoured for any inkling as to the company’s outlook in light of this. Note that demand is still outstripping supply in the UK housing market, and that government sources say the UK needs to build 300,000 new homes every year in order to redress the balance.

Reporting: Half-year results on 31 July
Broker Consensus:  59% Buy, 35% Hold, 6% Sell

Bullish: JP Morgan, Overweight, Target 250p, +70% (17 May)

Average 12-month target price: 177p, +21% (22 Jul)

Bearish: Credit Suisse, Neutral, Target 118p, -20% (30 Jun)

Page: 03

Lloyds Banking Group (LLOY)

Lloyds Banking Group PLC (-)

Will shares fall back towards 47p lows or rally towards 88p highs?

Lloyds Banking Group (LLOY) is a hugely popular stock with our clients. The bank has the biggest mortgage book of any UK lender and so is intimately connected to the property market. Tanking house prices could be a disaster, which is likely partly priced in to shares right now. But as for Taylor Wimpey above, will house prices really fall that far given that supply must increase by so much to bring prices down? Investors will also be looking for comforting forward guidance and any update on dividends and other enticing titbits for shareholders – Lloyds delighted markets with a special dividend in February. Will it come bearing gifts again this time?

Reporting: Half-year results on 28 July


Broker Consensus:  48% Buy, 28% Hold, 24% Sell

Bullish: Mirabaud Securities, Buy, Target 102p, +85% (2 Feb)

Average 12-month target price: 62p, +13% (22 Jul)

Bearish: Bernstein, Underperform, Target 40p, -27% (6 Jul)

Page: 04

BP (BP.)

BP PLC (-)

Will shares fall back towards 320p lows or rally towards 490p highs?

BP (BP.) is one of the stocks to have enjoyed positive share price action since the Brexit vote. The company books revenues in US Dollars, which is beneficial because BP pays its bills in British Pounds. The current FX environment is therefore beneficial for BP. A tough H1 might be expected, but the oil major’s outlook will again be of interest to investors and traders alike. Will divergent monetary policy in the US and UK make life even better? Remember we may get a UK rate cut in August while all signs point towards at least one US rate HIKE between now and the end of the year. Add to this what the company may say about how it views the current state of the oil market – is the sector set to regain its mojo?

Reporting: Half-year results on 26 July

Broker Consensus:  39% Buy, 52% Hold, 9% Sell

Bullish: Barclays, Overweight, Target 600p, +33% (15 Jul)

Average 12-month target price: 453p, +0.2% (22 Jul)

Bearish: Natixis, Neutral, Target 343p, -24% (27 Apr)

Page: 05



Will shares fall back towards 141p lows or rally towards 277p highs?

Following on from Lloyds, ITV (ITV) is another stock that has a history of returning cash to shareholders in the form of….special dividends! Quite simply, ITV is seen as undervalued. With shares down 30% year to date, and following an impressive post-Brexit performance, might the company use its results announcement to reward the faithful? Even if it doesn’t, its near 4% regular dividend yield and forward P/E ratio of 11.9 (anything less than 12 generally accepted as being a reasonable price, notwithstanding other factors) should attract interest from more risk-averse income seekers.

Reporting: Half-year results on 27 July
Broker Consensus:  54% Buy, 42% Hold, 4% Sell

Bullish: Liberum, Buy, Target 375p, +100% (18 Jul)

Average 12-month target price: 228p, +22% (22 Jul)

Bearish: Societe Generale, Sell, Target 155p, -17% (7 Jul)


NB: All pricing and consensus data from Bloomberg on 22 July; Full consensus breakdown available on request

Page: 06

Other blue chip companies reporting THIS WEEK include:

Monday 25 Jul

Aberdeen Asset Management, Hammerson

Tuesday 26 Jul

BP, GKN, Provident Financial, Sage Group, Virgin Money

Wednesday 27 Jul

Antofagasta, ARM Holdings, Capita, GlaxoSmithKline, ITV, Shire, St James’s Place, Taylor Wimpey, Tullow Oil

Thursday 28 Jul

Anglo American, AstraZeneca, BAE Systems, British American Tobacco, BT Group, Centrica, Compass Group, Countryside Properties, Diageo, INTU Properties, KAZ Minerals, Lloyds Banking Group, Merlin Entertainments, RELX, Rolls Royce, Royal Dutch Shell, Schroders, Sky, Smith & Nephew, Thomas Cook, Weir Group

Friday 29 Jul

Barclays, International Consolidated Airlines, Pearson, Reckitt Benckiser



The Accendo Markets Research Offering

Does your current broker’s morning report tell you all you need to know about yesterday’s news? If so, how is it offering you anything more than the plethora of information already available on the internet? What about what’s happened overnight?

If a company has reported earnings before the market opens, we’ll tell you why the shares are called to open up or down in relation to that announcement.

We don’t simply tell you which macro-economic data prints are due at what time, we break each driver down so that you fully understand what it all means. What are the expectations in relation to the historic trend? How will this affect the trading day ahead?

We’re proud that our morning editorial has become a hot commodity in the City, its content quoted daily by the journalists that are writing the news everyone else will be reading later in the day, if not the next. Our morning report tells you what’s driving the market at that moment and what to look out for in the day ahead.

The journalists don’t pay for it and neither do you, so why not give it a go? You’ve nothing to lose and a lot to gain.

Have Accendo Markets’ research delivered direct to you inbox for free

Page: 07

Our research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. Accendo Markets research has not been prepared in accordance with legal requirements designed to promote its independence and may not comply with FCA guidelines to prevent conflicts of interest and is not subject to any prohibition on dealing ahead of the dissemination of research. As such, this research does not constitute a personal recommendation or offer to enter into a transaction, it is produced and distributed for information purposes only. Accendo Markets considers information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

CFDs, spreadbetting and spot FX are leveraged products & can result in losses exceeding your initial deposit. They are not suitable for everyone, so please ensure that you understand the risks.
The value of shares can go down as well as up, so you could get back less than you invest.

Telephone calls and online chat conversations may be monitored and recorded for regulatory and training purposes.

* We provide these as underlying assets to CFDs and Spreadbets.

To view our policies and terms, please click here

This website is not intended for or directed at residents of the United States or any country outside the UK. It is not intended for use by or distribution to any person in any jurisdiction or country where its use or distribution would contravene any regulation or local law.
Prices on this page are delayed.

Like many websites, we use cookies for statistical purposes and to acquire information on general internet use. This helps ensure that you get the full benefit of our services, and enhances your browsing experience . For more details on the cookies we use, view our privacy policy under the heading 'How We Use Cookies'. By using this website, we'll assume that you're happy to receive all cookies from Accendo Markets.
Removing cookies may impede the operation of some parts of this website. For general information about cookies and how to remove them, please click here 

Accendo Markets Ltd - 1 Alie Street, London, E1 8DE (UK) Telephone: 020 3051 7461 - Accendo Markets Ltd. is Authorised and Regulated by the Financial Conduct Authority (FCA) No. 475285. Accendo Markets Ltd. Registered in England and Wales No. 6417051. © Copyright Accendo Markets Ltd 2015. All rights reserved.

4.83 Average

148 Reviews

Peter p

I have been trading with Accendo Markets and James Abbott my account manager for coming on 5 years now, James Abbott the senior trader of Accendo Markets provides me with up to minute information when I need it and find him very easy and professional to deal with. Whenever I need to trade or am not sure about anything James is always their to help with any queries I may have. The Accendo Platform I find very easy to use and navigate although it has been slightly changed over the years but definitely for the better. Personal when I do trade 90% of the time, I rather telephone call to place my trade dealings and if James is not there to take my call I find others at Accendo like Sam, Lee take my trades and are. All in all everyone at Accendo Markets are amazing to deal with and my relationship with Accendo is just as I like it. Peter Petrou

Posted 3 months ago

Mrs. J

"Our Trader, Aymen Azizi, has been nothing but attentive to our every need throughout our long relationship with him. No issue is too small, full explanations on all our questions."

Posted 4 months ago

Brian R

I have been with Accendo for a long time now, ten or twelve year's, probably more . As I told Sam (my trader) I thought that CFDs were better than sex . I stopped trading for a few years and only started back about a couple of months ago. But it is as if I had never been gone , so to speak. Sam has helped me every step of the way, at my age one forgets things. I have only praise for Accendo and as far as I am concerned the platform is the best . Now I am back trading at 71 years of age, I might even try sex again. Brian Robertson.

Posted 5 months ago

Jim W

I understand how to make a profit with CFDs. I am restricted by the range of companies I have knowledge of. Although, I am not sure that is a big problem. Tom Robertson is a very fine man.

Posted 7 months ago

Rebekah S

Well, I would not be trading without the help of my trader, Sam Alnakkash. He provided a really great overview of Accendo Markets, an insight into trading in general and how to get started in trading online. His advice, support and training has been fantastic all along the way, enabling me to start trading earlier than I would have done had I not had the support. He has also been very adept at understanding me as a client in order to help me achieve my trading goals. I still have a lot to learn and hope I will get there.

Posted 7 months ago

Nick z

I like the updates on shares I trade. Updates from Bloomberg and Reuters plus industry updates and breaking news. I've had Matt Grice and James Abbott and found both to be excellent. I would like to continue a personal service with James. He understands how and which stocks I trade.

Posted 9 months ago

Steve O

Excellent, knowledgable broker interaction and communication, coupled with very good research and analysis.

Posted 9 months ago

William P

Being new to direct trading I needed help and was given all the time and advice that I needed to feel fully able to make decisions on what I wanted to invest in. I asked for and got exactly the type of info I required provided by Tom Cook, who I would recommend to anyone looking for help.

Posted 9 months ago

Mr. W

I have been dealing with accendo for the past 8 years my broker Amrit I find him very helpful when he is there lol and had many offers to change but will not do it Bill Roberts

Posted 9 months ago

Zoran N

Very good all round service! Timely market information. (charts + trends coverage ) On the ball accounts managers ,quickly available and alert . Part of my success owed to my personal manager Mr Sam Springet , than you.

Posted 9 months ago

Mr Brian C

Easy to deal with.....

Posted 9 months ago

Muhammed S

Accendo markets are great for trading cfds and their research is second to none! Aymen manages my account is extremely helpful and always keeps me updated on market info. Thanks again

Posted 9 months ago

Mr Buta B

Always available, whenever I call I get straight through to someone that can and will help. The staff are very knowledgeable, helpful and easy to talk to.

Posted 9 months ago

Stephen B

Aymen Azizi keeps an eye on what is happening in the market and informs me with timely relevancy, email call, and txt.

Posted 9 months ago

Mr. G

the web site is so easy to use and Aymen my point of contact provides exactly the right level of intervention

Posted 10 months ago

Jyotish G

Very good info and continuous support from Aymeb

Posted 10 months ago

Chander S

The personal service of my dedicated broker is excellent. I do get daily mails on market conditions and information of future ex dividend dates of Stock by accendo Market, which is helpful to make a decisions on buy or sell stock. the whole concepts helps in to play with some money, risks and rewards in this share Market world, which makes me happy if and when I make any money,

Posted 10 months ago

Dilip P

My account manager Aymen has provided unbiased professional advice since day one. He allows me to trade at my own pace and is not pushy at all unlike most other brokers. Aymen is an extremely valuable asset to his Company and I would highly recommend Aymen and Accendo Markets.

Posted 10 months ago


Having an individual on call to help me, as a complete novice gives me the confidence to try trades to see what happens. The platform is very easy to use.

Posted 11 months ago

Frith L

Whenever I have a query Accendo are always willing to help out with a patient answer. I especially mention Tom Robertson here whose valuable help has aided me in charting new waters. I really appreciated his call when a share of mine was doing well. Keep up the good work all.

Posted 1 year ago

John F

pleasant people who know what they are talking about and i have had much help and information from adam vettese who answers every one of my questions in format that i understand , a great company, i am very pleased.

Posted 1 year ago