Equities Update: Greggs, Rightmove, IAG, Fresnillo, Bunzl, Ashtead…

Investors back on board with IAG as earnings soar

Mark Crouch, market analyst at eToro, says: “After enduring a nearly five-year slump, IAG shares have soared over the last twelve months, as the British Airways owner has outpaced its competitors with strong demand for its transatlantic routes boosting earnings by 27%.

“IAG had struggled to win back investors after the pandemic and the resulting inflationary fallout. Even as earnings rebounded and passenger numbers approached full capacity, investors remained cautious about jumping back on board with IAG.

“However, with global passenger numbers now surpassing pre-pandemic levels and demand for air travel on the rise, airline investments are gaining popularity. The return of IAG’s dividend, along with punchy share buybacks, appears to have tempted investors back into the fold.

“That said, potential storm clouds are never too far away. And should inflation continue to push costs higher, something IAG has been able to pass on to customers, these increases could eventually impact the bottom line.”

Bunzl shares slip despite dividend hike

Adam Vettese, market analyst at eToro, says: “Distribution group Bunzl has seen its shares dip this morning after deflation weighed on revenue more than expected. The firm has also spent a record amount on acquisitions which is their core strategy for growth.

“Not even an 8% dividend hike could stop shares being sold off at the open today. Bunzl will now be looking to benefit from the purchases it has made, as well as hoping that prices stabilise in order for shares to resume their upward trajectory. Shares have gone from strength to strength the last few years and some investors could see this as a buy the dip opportunity.”

Eurozone Inflation Cools, Strengthening ECB’s Position

Lale Akoner, Global Market Analyst at eToro, says:  “Eurozone inflation eased to 2.4% in February, down from 2.5% in January, with a notable decline in services inflation to 3.7% from 4%, a key component of CPI that is typically more persistent and harder to control.

“This data boosts investor confidence that the European Central Bank (ECB) is effectively managing inflation, while also positioning itself to address economic headwinds. Key challenges include policy uncertainty from potential U.S. tariffs and geopolitical risks, such as a failed Ukraine peace deal.

“We still anticipate an ECB rate cut this week to support economic growth. However, market attention will be on ECB’s guidance – whether policymakers still see rates as ‘restrictive’ or signal that the rate-cutting cycle is nearing its end with a more hawkish stance.”

Slow US construction weighs on Ashtead

Adam Vettese, market analyst at eToro, says: “Only a few weeks after issuing a profit warning at the back end of last year, Ashtead has missed on both revenue and profit in its latest update.

“The miss on revenue reflects headwinds in the US commercial construction sector, where higher interest rates continue to weigh on activity, though Ashtead’s diversified rental model, hurricane response and exposure to mega projects may have cushioned even broader weakness.

“There has been a difference of opinion between the White House and the Federal Reserve with regard to the path of interest rates and given the recent share price decline, Ashtead investors will be hoping the President wins that tug of war and rates come down sooner.

“The company is pushing ahead with listing on the US market, pending shareholder approval, which could also give the firms valuation a boost.

“Ashtead is holding its ground in less than ideal conditions and some investors might see this as a chance to pick up stock at a discount. That said, we will need to see the company push on this year in order to get anywhere near the knockout share price performance we have seen over the last few years.”

Fresnillo announces special dividend as gold and silver prices shine

Mark Crouch, market analyst at eToro, says: “Fresnillo has posted a strong set of results for 2024, the precious metals miner saw revenue jump markedly, and despite elevated production costs, increasing demand for precious metals pushed Fresnillo’s gross profits to more than double that of the previous year.

“With silver prices reaching a twelve-year high last October, and gold making new highs on what feels like a monthly basis, Fresnillo has largely under-performed the metals. Even now, shares of the worlds largest silver mining company are trading at levels historically associated with much lower gold and silver prices, and while this could present an opportunity for investors, bad weather, price volatility and currency fluctuations all represent potential pitfalls for Fresnillo.

“That being said, the announcement of a special dividend highlights the rewards Fresnillo is reaping from strong market conditions. Looking ahead to 2025, the softening US dollar is likely to provide a tailwind for gold and silver prices and despite global equity markets showing signs of strain, precious metal prices have remained resilient, which bodes well for Fresnillo’s future prospects.”