Equities Update: Bellway, Coca-Cola, BP…

Bellway cautious on affordability despite order book growth

Adam Vettese, market analyst at eToro, says: “Investors might have been looking for continued momentum from Bellway’s update this morning after a lower inflation print and rate cut helped boost the sector in recent weeks. However, despite an improvement on last year, which was very much a low bar, Bellway has highlighted concerns with mortgage affordability continuing to affect the business.

“With stamp duty thresholds to be lowered on April 1st, many analysts were predicting a big surge of completions to go through before this date as movers look to save on tax. Unfortunately for Bellway this seems to be more than offset this morning by the fact that there are now fewer rate cuts pencilled in for the year and inflation is set to take longer to settle to the Bank of England’s 2% target.

“Shares have plunged 6% this morning and are now almost 30% lower than their 2024 peak which was only back in October. This could seem like an attractive discount to some investors but as we see increasingly that high mortgage rates are far from an overnight fix, there could still be a tough few months to battle through for UK housebuilders.”

An identity crisis for BP sees profits fall to a four-year low

Mark Crouch, market analyst at eToro, says: “Not since the pandemic has BP reported numbers this low. The company’s fourth-quarter profits plummeted year-over-year, as weakening margins significantly dented the oil major’s bottom line. Despite this disappointing performance however, market attention is shifting away from the earnings themselves and focusing more on the company’s future direction—especially following the news that Elliott Investment Management has taken a stake in BP.

“BP’s foray into renewable energy has not paid off, contributing to a four-year low in profits. In this context, Elliott’s investment may be seen as a lifeline for BP shareholders, who have had to bear the brunt of the company’s inconsistent strategy.

“Amid what appears to be an ongoing identity crisis for BP, Elliott, one of the world’s largest and most activist hedge funds, is likely to push for a strategic realignment. With a reputation for shaking up underperforming companies, the firm could help BP refocus on its core strengths, namely oil and gas production, and for BP’s shareholders, at not a moment too soon.”

Coca-Cola bubbles up with strong quarter despite currency headwinds

Mark Crouch, analyst at investment platform eToro, says: “After a disappointing third quarter, Coca-Cola has bounced back here with an encouraging set of results for its final quarter of 2024, demonstrating a resurgence in global demand for its core sparkling soft drink portfolio.

“Chairman and CEO James Quincey is fond of describing the company’s strategy as ‘all-weather’ and judging by this latest quarter he has a point – the strength of the US dollar in recent months serves to depress the dollar value of Coca-Cola’s overseas earnings, but despite those currency headwinds, the company has delivered robust revenue and profit growth and sailed past expectations. As well as sparkling drinks, the company has a number of brands in the water, sports and tea arena, such as Smartwater, Powerade and Fuze Tea, that have shown significant growth over the last few years and that trend has continued, helping to bolster overall performance.

“Shares in Coca-Cola have been on an upward trajectory since the start of the year and the numbers reported today could well add to its momentum. Guidance of organic revenue growth of 5% to 6% for this year may be a little underwhelming, and investors may have some concerns over short-term cash flow with the billions the company has tied up as a deposit related to ongoing tax litigation, but early market reaction has been upbeat, with shares in Coca-Cola rising more than 3% in pre-market trading.”