Equities Update: Premier Foods, Kier, Wetherspoons, Johnson & Johnson, EasyJet…

Exceedingly good Christmas for Premier Foods

Adam Vettese, market analyst at investment platform eToro, says:  “There are many people out there looking back on the festive period thinking they probably indulged in a few too many mince pies and Premier Foods owes them a thank you. Sales were up across the board but standing out was a 20% bigger appetite for Mr Kipling mince pies. The company also benefitted from consumers upgrading and treating themselves with sales of the premium version doubling. Even with cost of living remaining high, a boost in consumer confidence might see spending increase on simple affordable luxuries such as higher quality grocery items. 

“Premier Foods portfolio of well-known and trusted brands has been key to their success and helped deliver a 40% increase in the share price last year alone. With profits now predicted at the upper end of estimates entering their final quarter, investors will be hoping for more of the same so the price can push on further this year.”

Kier launches share buy backs following robust trading update

Mark Crouch, market analyst at investment platform eToro, says: “The latest trading update from Kier Group suggests the future is bright, following a period of consolidation after the strong momentum generated over the past two years was beginning to falter. Despite backlash against Labour’s controversial budget, the government’s policies have not been bad news for everyone. Planning reforms and planned infrastructure spending mean Kier Group is set to be a key beneficiary.

“Kier Group’s balance sheet looks to be structurally sound, with an increasing order book and several new contracts worth hundreds of millions of pounds, Kier’s free cash flow is on the rise while net debt is falling, and despite margins being under pressure, the signs suggest the business is well-positioned for future growth. The challenge now is whether Kier can build on the strong foundations it has laid for itself.

“2024 saw the reintroduction of dividend payments after a five-year hiatus, something that investors will be hoping is now set in stone. With Kier’s announcement this morning of a £20m share buyback, this seems increasingly likely.”

Wetherspoons’ festive boost overwhelmed by rising costs in lukewarm trading update

Mark Crouch, market analyst at investment platform eToro, says: “Wetherspoons have served up a lukewarm trading update this morning after rising food and drink sales during the Christmas period were all but watered down due to the rising cost of operations. Despite coming off the back of a record year, the pub operator is facing significant pressure from increasing expenses which has led Wetherspoons’ chairman, Tim Martin, to publicly call out Sir Keir Starmer in the latest trading update, urging a resolution to the “tax discrepancy” surrounding the 20% VAT on food sales.

“While Wetherspoons has a history of navigating economic challenges, shareholders may be concerned about the company’s performance in a record year as shares were down over 25% from their highs in 2024. This raises the question: If Wetherspoons is struggling now, what will it take—beyond government intervention—to reverse its fortunes? The company may need to consider raising prices, but with the risk of reducing demand, this is something they will likely want to avoid.

“That said, Wetherspoons is taking proactive steps to address the challenges it faces. The focus on opening new pubs in high-performing areas, particularly major cities and travel hubs, is a sound strategy and in full flow. However, with costs rising, the company will need to become even more efficient in order to keep the wolves from the door.”

EasyJet remains on course despite loss

Adam Vettese, market analyst at investment platform eToro, says: “EasyJet has reported a loss, albeit a smaller than expected one for the last quarter. The short haul carrier typically sees a quieter Q4 despite more festive travellers than usual.

“The low-cost airline does the lion’s share of its business in the summer months. Looking ahead there are significantly more passengers booked and more importantly 25% growth in their much more profitable package holidays.

“Shares are down this morning after a strong finish to 2024 and are now 20% away from their December peak. With their best months ahead of them some investors might see this as an opportunity to pick up some shares at a discount provided the company can deliver.”

Johnson & Johnson reports solid results, along with upbeat guidance

Mark Crouch, analyst at investment platform eToro, says: “Medtech and pharma multinational [Good%20morning,]Johnson & Johnson reported for its fourth quarter before the market open on Wednesday and managed to deliver an overall encouraging message, with earnings and revenue both ahead of expectations. Investors will surely be a touch concerned, though, by the ongoing effect of last year’s acquisition of cardiovascular medical device firm V-Wave, with the company continuing to write-off significant amounts for in-process and development charges arising from the deal in Q4. Furthermore, the transaction is expected to dilute earnings into 2025.

“As a counterbalance to this, drug sales look healthy as a whole. Psoriasis drug Stelara still constitutes a large portion of J&J’s drug revenue, despite falling sales – a trend which is expected to continue as similar competitor treatments join the market –  but worries over this are likely to be dispelled by the strength of sales in the company’s oncology drugs, particularly the dazzling performance of blood cancer treatment Darzalex, which has replaced Stelara as the overall star performer.

“On top of this, the pipeline looks promising, with J&J’s Rybrevant/Lazcluze lung cancer combination therapy recently gaining approval from the European Commission, and the board has issued encouragingly upbeat guidance. In spite of this, early market initial reaction has been negative, with shares in the company slipping more than 1% in pre-market trading.”