Equity update: WH Smith, Sainsbury’s, AstraZenica and more

Travel once again the star of the show for WHSmith

Adam Vettese, analyst at investment platform eToro, says: ”WHSmith is proving its durability even in these tougher times for retailers, with half-year revenues and profits both up year-on-year.

“Travel has once again been the area of strength. In airports and train stations, retailers can charge a premium to a captive audience and it shows in the numbers as it pulls in more than double what the high street does. The transformation from books and magazines to a one-stop shop for all travel essentials including tech items allows scope for further growth as more product lines are added. The firm is looking to open more stores this year, particularly in the US, and investors will want to see this success replicated across the pond.

“Despite the positive numbers, shares have dipped this morning and are trading around year lows, which some investors may see as an opportunity with shares starting the year around 10% higher.”

Key cancer drug sales powers strong Merck earnings

Adam Vettese, analyst at investment platform eToro, says: “Merck beating expectations for both its top and bottom line was driven to a large degree by its key immunotherapy medicine Keytruda, which is used to treat multiple types of cancer. Sales in Keytruda surged 20% in the first quarter, coming in at $6.9 billion which made up almost half of the company’s total revenue.

“One major stormcloud on the horizon, therefore, is the 2028 expiration of Merck’s patent for Keytruda. To mitigate patent expiration, it’s essential for pharmaceutical companies to have other drugs coming down the pipeline and, in Merck’s case, they have a new pulmonary hypertension drug called Winrevair, which was approved by the FDA just last month.

“The acquisition of oncology pharmaceutical firm Harpoon Therapeutics earlier this year is a further sign of preparation, while a doubling in sales for the pneumococcal vaccine Vaxneuvance is a sign of encouragement that other drugs may be positioned to take up the slack with time. Shares in Merck rose over 2% in pre-market trading.”
 

AstraZeneca jumps on solid results and strong pipeline

Adam Vettese, analyst at investment platform eToro, says: “Shareholders won’t mind taking their medicine when it comes in the form of a solid update like this. Revenue and profit have both beaten estimates on strong, consistent demand and the firm’s upcoming pipeline also bodes well for the future. New drugs on the way, such as Tagrisso for lung cancer, are helping AstraZeneca cement its place as a leader within the sector. 

“The company already announced a dividend hike earlier this month at its AGM which is another reason the pharma giant can be even more attractive to investors. Post-covid the shares have gone from strength to strength and are now up over 10% this year following this morning’s update. Investors will now be hpoing the stock can reclaim its record high seen in 2023 and push on beyond.”

Sainsbury’s “Food First” strategy is winning back customers at record pace

Mark Crouch, analyst at investment platform eToro, says: “Sainsbury’s has arguably been guilty in the past of having its fingers in too many pies, allowing lower cost rivals to muscle in on market share. However, after launching its “Food First ” strategy which has since evolved into “Next Level Sainsburys” earlier this year, a renewed focus was given to groceries, the Nectar loyalty card scheme and £1bn of cost savings. This morning’s results indicate these innovations are beginning to bear fruit as the supermarket chain reported record volume growth, with grocery sales up 9.4% and expected to increase in the year ahead.

“Over the last 12 months, Sainsbury’s has managed to wrestle back market share from rivals in what is an unrelenting tug of war between the UK supermarkets. Engaging in a delicate balancing act between pricing and profit, Sainsbury’s invested heavily in value to bring more of us back to do our weekly shop. Nectar rewards have been at the heart of that push, saving customers £12 on a typical £80 shop.

“The introduction of a £200m share buyback scheme is great news for shareholders that the company is moving in the right direction. And at a time when fallout from higher inflation continues to eat into household budgets, now more than ever, price and quality are paramount.”