Equities Update: Aston Martin, Coca-Cola, Tesla, Reckitt, easyJet

Aston Martin pin hopes on a garage refresh to reverse the company’s fortunes

Mark Crouch, analyst at investment platform eToro, says: “Aston Martin’s spiralling debt is more than just a bump in the road for the luxury car maker, and while this morning’s update confirmed Q2 performance was in line with guidance, this and lingering production inefficiencies have forced Aston Martin to hire their fourth CEO in as many years.

“As the company pursues a garage refresh, Aston has wound down production of older core models, instead opting to focus on new models including the Vantage and upgraded DBX707, their new V12 Vanquish has already sold out into 2025.

“Despite the constant misfires, rising debt and woeful financial performance, Aston Martin still boasts a brand that is the envy of their competitors, and it’s the reason the company has managed to avoid bankruptcy on numerous occasions. Aston says the emphasis will now be on quality over quantity, focusing on pricing power for newer models in what’s becoming a desperate drive to get the company back on track.

“One thing is for sure, something needs to change if the company is to make a U-turn in fortunes. A great name can only save you for so long. Aston Martin sports cars will always be popular, but if the company is not able to produce them at a profit, then it doesn’t take an expert to predict where that road will lead.”

Global demand helps Coca-Cola beat estimates

Adam Vettese, analyst at investment platform eToro, says: “Coca-Cola has delivered a solid, if not particularly sparkling, set of results for its second quarter, beating expectations for both the top and bottom line. While there may be concerns over signs of weakness from the US consumer, the overall picture remains cautiously optimistic.

“Inflation has contributed to a higher price mix and this has boosted revenue, but we can see that the company has also performed well in terms of volume growth outside North America, particularly in emerging markets. Demand for its flagship Coca-Cola product has plateaued in certain key markets, but the company has done a nice job compensating with variants, such as the strong-performing Coca-Cola Zero Sugar, and other drink segments.

“The strength of the US dollar has been a notable headwind, but in spite of this the company has still achieved robust growth in operating income. Going forward, a strong marketing push as part of its long-established history with the Olympic Games bodes well for the summer and beyond, and the company has lifted its full year outlook to forecast organic revenue growth of 9% to 10%, which is at the upper end of the company’s long-term growth model.

“Initial response to the results has been mildly positive, with shares rising 1.7% in pre-market trading on Wall Street.”

Tesla’s tumultuous year continues

Josh Gilbert, Market Analyst at eToro: “Tesla missed earnings estimates for the fourth quarter in a row, extending its tumultuous 2024. Most other key metrics missed estimates, but revenue did jump to $25.5 billion, above the $24.6 billion expected. 

“After a better-than-expected delivery result at the start of Q2, shares have been on a tear, spurred on by price cuts. However, that positivity has come back to bite, with its automotive gross margin excluding regulatory credits falling to 14.6%, lower than the 16.4% in the first quarter. 

“One of the biggest disappointments is the view of ‘notably lower’ vehicle sales in 2024. Essentially, we may see a year where Tesla doesn’t see vehicle delivery growth, and that would be a real sucker punch for investors, with profitability falling on the view of higher volume promised by Elon Musk. 

“Cybertruck production has stepped up significantly, and production looks to be profitable by year-end, while plans for its low-cost vehicle are being made for 2025, a few positives to takeaway. However, little mention of what’s next for Robotaxi, with a specific focus on AI, will leave Wall Street yearning. 

“We needed some Musk magic on the earnings call to reassure investors after these lacklustre results, but we got nothing of the sort. He was subdued and offered little insight as to what’s next for investors, and that will put shares under pressure over the days ahead.”

easyJet holidays boosts profits

Adam Vettese, Market Analyst at investment platform eToro says: “easyJet’s update reads pretty well with a 16% rise in profit and demand looking strong for the important July to September period. This comes just a couple of days after a very concerning update from Ryanair with missed forecasts and more price savvy consumers putting pressure on fares. Whilst a race-to-the-bottom in prices would certainly not be favourable for easyJet either, the firm doesn’t have the same exposure to Boeing-related issues that Ryanair does and is also benefiting from strong performance in package holidays, which is again an advantage over its peer. The package deals have brought in an almost 50% bump in profit in comparison to last year and could well be the difference maker if pressure on fares continues.

“Shares have pared all of this week’s losses following this morning’s update but are still slightly offside for the year. All eyes will be on the next update to see if easyJet can have a strong summer and potentially propel the share price back to the year-high some 25% from”

Reckitt brands are holding up but company still facing a tough year ahead

Mark Crouch, analyst at investment platform eToro, says: “2024 has been a tough year for Reckitt Benckiser. Following a US jury ruling that one of the company’s infant formulas had caused the death of a premature infant, the crisis not only has the potential to severely damage the company’s image but might end up costing Reckitt billions in resulting liability claims. Combine that with challenging market conditions and it’s not turning out to be a good year for the consumer goods company.

“While inflation has eased in recent months, prices remain high and brand loyalties are being tested. Household name brands like Finish, Nurofen and Lysol are still popular with consumers, however when store brand alternatives are available for half the price, it’s not surprising consumers are being pulled away by the need to adapt to the new economic landscape.

“Reckitt’s robust business model means margins have improved slightly and shareholder returns continue to be ramped up substantially. However, investors will be all too aware of the company’s poor share price performance over the last few years. Reckitt shares are now trading at eleven-year lows, some 45% lower than in 2020, so the company must tread carefully, as what started out as a bad year could spiral into a disastrous one if the current issues facing the business are not managed diligently.”