Defence budget boost bolsters BAE coffers

 

Adam Vettese, market analyst for eToro says: “BAE Systems delivered a robust half-year performance with most metrics moving in the right direction, sales and underlying EBIT both up 13% and underlying earnings per share rising 7%. Importantly, their record order backlog of £74 billion reflects strong demand, bolstered by acquisitions like the Space & Mission Systems business.

“Every division contributed to growth, especially Air and Maritime. Investor enthusiasm is supported by the sector-wide momentum and BAE’s proactive investment in high end technologies, infrastructure, and talent. However, there are a few areas to watch. Free cash flow fell sharply to £219 million due to outflows tied to acquisitions, and net debt is now £6.1 billion after March’s debt financing. Order intake, while solid at £15 billion, dipped from last year’s exceptionally high figure.

“The investment case is compelling with the backdrop of increased defence spending commitments, especially the UK and NATO pledges to raise defence budgets towards 5% of GDP. This creates a strong pipeline for BAE’s broad portfolio and shares have already seen the benefit this year to the tune of around 60% so some profit taking is not completely out of the question. Still, investors should monitor cash conversion, integration of new businesses, and the return to stronger free cash generation. That being said, these results highlight BAE’s discipline, portfolio strength, and prominent position as one of the chief beneficiaries of the new defence spending cycle.”

 

Novo Nordisk slumps after poor results

Chris Beauchamp, Chief Market Analyst at IG: “Novo Nordisk shares continue to endure their own remarkable weight loss programme, falling sharply in the pre-market, and are on course to have lost around 2/3 of their value since the July 2024 peak. This is a classic case of market euphoria and elevated expectations being the downfall of a share price; amid all the noise income at the company continues to soar. The pendulum has swung from wild optimism at 39 times earnings a year ago to rampant pessimism at 11 times now – are there any investors brave enough to snap up a possible bargain?”

 

 

Greggs feeling the heat as expansion outpaces consumers appetite 

 

Mark Crouch, market analyst at eToro says: “Greggs’ 14% drop in first-half profit caps a bitter ten months for the UKs favourite baker. Management blames hot weather for weaker sales, but that doesn’t account for a 50% collapse in market value. The more plausible culprit is the timing of Greggs expansion strategy, stretching margins, just as the consumer picture turns more fragile.

“Greggs has long been a reliable read on the UK high street. Its sudden stumble suggests consumers may not just be cooling on sausage rolls, but that appetite across the high street may be waning more broadly. With inflation easing and real wages recovering, the macro backdrop should, in theory, be supportive. That it isn’t showing up in Greggs’ numbers, is a red flag.

“Greggs’ brand still holds a strong place in the market, but scale isn’t helping if margins and volumes can’t keep up. The pressure is now squarely on management to regain the initiative, and not just blame it on the weather.”

 

 

Profit warning lays bare the cracks at Taylor Wimpey

 

Mark Crouch, market analyst for eToro, says: “Taylor Wimpey’s foundations have looked shaky in 2025. This morning’s profit warning, pinned on a £20m one-off charge for historic site remediation, might offer a convenient scapegoat, but even adjusted, profits are down on last year. 

“As one of the UK’s largest volume housebuilders, Taylor Wimpey is heavily exposed to a market where fewer people can afford to buy. High interest rates, relentless house prices, and punitive stamp duty seem to be choking demand. Last year’s cautious optimism has all but vanished, and with completions slowing and forward sales under pressure, the group is caught between rising build costs and a shrinking buyer pool. 

“Unless affordability improves, or Taylor Wimpey finds a way to adapt faster, it could find itself building homes no one can afford to live in.”

 

Meta holds AI momentum as it goes into earnings

 

 

Nikos Tzabouras, Senior Market Analyst at Tradu.com, commented:

 

“Meta Platforms stands out among its Magnificent Seven peers, heading into the earnings with significant AI momentum. Capital expenditure, advertising sales, and forward guidance will be key areas of focus. Mark Zuckerberg is determined to keep Meta Platforms at the forefront of AI, spending heavily on chips, data centres, and strategic hiring. Moreover, he has been more effective in demonstrating return on investment, with increased user engagement and improved outcomes for advertisers.

“However, cracks are beginning to show in the advertising market amid challenging macroeconomic conditions, which could put pressure on ad sales – Meta’s primary source of revenue. With Alphabet already having raised its 2025 spending target, Meta may feel compelled to follow suit. Yet, as revenue and profits grow at a much slower pace than capital expenditure, further divergence could begin to worry markets.

“Meta’s AI leadership can continue to propel the stock forward, but any weakening in advertising can stall the momentum, while the lofty valuation raises the bar for earnings success.”



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