Equities update: Easyjet, BT, Alphabet, Tesla, Fresnillo, Wetherspoons, Kier, Compass

EasyJet profits take a nosedive on fuel, but shares still manage a soft landing

Adam Vettese, market analyst for etoro, says:“EasyJet’s shares have opened higher this morning after a trading update that, while showing a sharp drop in quarterly profit, offered enough operational reassurance to ease some of the pressure from yesterday’s 12% plunge.

“The airline reported Q3 headline profit of just £85 million, down from £286 million a year earlier, almost entirely due to a £105 million jump in fuel costs. Load factors and revenue per seat were softer, but the damage was contained. EasyJet Holidays held firm at £84 million profit, on-time performance and customer scores continued to improve, and late bookings into the peak summer period are strengthening.

“Yesterday’s sell off was driven by reports that the EU is reviewing airline ownership rules, potentially complicating the competing US takeover approaches from Apollo and Castlelake. That regulatory overhang remains the bigger story. Today’s numbers neither turbo charge the deal case nor undermine it. They simply show the underlying business is still functioning through elevated fuel prices and geopolitical noise.

“In short, this is a solid-enough update that allows the market to look past the pure profit miss and refocus on the takeover process. The modest bounce suggests investors are relieved there were no fresh operational shocks.”

BT looks beyond legacy as fibre momentum builds

Mark Crouch, market analyst for etoro, says:“For years, investors have waited for BT’s fibre investment to deliver returns beyond faster broadband speeds. That patience may finally be starting to pay off. Headline numbers may have fallen just short of expectations, but the more important story lies beneath the surface. Record fibre connections, rising customer take-up and continued progress across Openreach suggest the group’s long-term strategy is gathering momentum, even as the decline of the legacy voice business continues to create static in the short-term results.

“After years of prioritising investment over immediate returns, the market is beginning to ask a different question, not whether BT can build the network, but how much value it can ultimately extract from it. Investors are increasingly looking beyond quarterly fluctuations, focusing instead on whether BT can convert its vast fibre network into stronger and more sustainable cash generation over the coming years.

“Management’s decision to reaffirm full-year guidance should provide reassurance that the business remains on track despite fierce competition.

“The challenge now is ensuring fibre growth gathers pace quickly enough to offset the inevitable decline of traditional fixed-line services.”

Alphabet and Tesla earnings: showing two very different stages of the AI investment cycle

Lale Akoner, global market strategist for etoro, says:“Alphabet and Tesla are showing two very different stages of the AI investment cycle. Alphabet is spending heavily, with capital expenditure expected to reach as much as $205 billion this year, but investors can already see some return. Google Cloud revenue rose 82%, its backlog reached $514 billion, and demand for AI infrastructure is turning new capacity into sales.

“Tesla is asking for more patience. Vehicle deliveries recovered, but discounts weakened profitability, free cash flow turned negative, and spending on AI, robotaxis and robotics is rising before these businesses generate meaningful revenue. That makes Tesla’s investment case more dependent on future execution than current earnings.

“That distinction is reflected in etoro’s latest UK Retail Investor Beat. Nearly one in three UK retail investors (31%) say large technology platforms integrating AI, including Alphabet, are the part of the AI market most likely to produce the strongest returns over the next five years, the most selected category. Cloud and infrastructure providers, including Google Cloud, were selected by 25%. The same survey also found that one in five UK investors (20%) are more likely to invest in an AI-disrupted sector only when the underlying businesses remain strong.

“For retail investors, the lesson is that high AI spending is not automatically negative. Markets are more willing to fund it when revenue and cash flow are growing alongside it. Alphabet is beginning to show that connection. Tesla still needs to prove that its ambitious projects can move from technological promise to commercial returns.”

Fresnillo’s steady hand shines through precious metals volatility

Mark Crouch, market analyst for etoro, says: “Fresnillo’s latest production update is unlikely to set pulses racing, but it does reinforce the investment case built around operational consistency rather than headline growth. While silver and gold output remain below last year’s levels, much of the weakness was anticipated and reflects temporary grade variability and the expiry of the Silverstream agreement rather than any deterioration in the underlying business. More importantly, management’s decision to reaffirm full-year production guidance suggests the business remains firmly on track to deliver what it promised.

“The recent pullback in silver prices may have taken some heat out of investor enthusiasm following a remarkable rally, but the broader investment case for precious metals remains difficult to ignore. Record government borrowing, rising global debt burdens and continued fiscal spending all point to a world where investors are likely to keep seeking hard-asset exposure. While inflation has eased from its recent peaks, questions remain over how durable that trend will prove. Against that backdrop, a well-run producer like Fresnillo looks well placed to benefit if precious metals regain their momentum.”

Wetherspoons pours on sales but profit leaves a bitter taste

Adam Vettese, market analyst for etoro, says:“Wetherspoons’ Q4 trading update delivered the sales momentum investors had hoped for, with like-for-like sales up 5.6% and total sales rising 5% in the quarter. The group continues to outperform the wider hospitality sector by a meaningful margin, underlining the enduring appeal of its low price, high volume model in a squeezed consumer environment.

“Yet the shares fell double digits at the open because the market focused on what wasn’t said. Persistent cost inflation through national insurance, wages, repairs and business rates continue to eat into margins. The company has already flagged that full year profits are likely to come in below last year’s £81m and earlier City forecasts. Strong top line growth is not translating into bottom-line progress, and investors are understandably questioning how quickly, if at all, margins can recover.

“On the positive side, the franchise expansion and freehold ownership provide lower risk growth levers and balance sheet support, while ongoing buybacks offer some capital return. For now, the shares look good value on a sales and asset basis, but the profit outlook remains the dominant near-term driver. The October prelims will be closely watched for any signs of margin stabilisation.”

Kier Group lays solid foundations as shares surge

Adam Vettese, market analyst for etoro, says: “Kier Group shares surged at the open after the infrastructure and construction group issued a reassuring trading update this morning.
 
“The update confirmed that trading since the start of the new financial year remains in line with board expectations, with performance continuing to be second half weighted. Management highlighted that the record order book continues to provide strong revenue visibility, building on the momentum seen in the first half.

“Investors welcomed the steady message, which suggests the positive trends reported in March including revenue and profit growth, margin improvement, and the shift to a net cash position are being maintained. With the order book offering good coverage into next year and no change to full year guidance, the update removes near term uncertainty ahead of September’s full year results.

“While the update contained few surprises it has been enough to lift sentiment as investors hope shares can regain levels seen near the start of the year.”
 

Compass serves up another strong quarter as outsourcing demand accelerates

 
Mark Crouch, market analyst for etoro, says:“Compass has once again demonstrated why it remains the gold standard in the global catering industry. Organic revenue growth of 7.1%, accelerating new business wins and exceptional client retention suggest demand for outsourced food services remains as healthy as ever, despite a more challenging cost environment. What’s particularly encouraging is that half of new contracts are coming from organisations outsourcing for the first time, highlighting the significant runway for future growth in a market that remains far from fully penetrated.
 
Perhaps the most compelling aspect of this update is where that growth is coming from. Compass is benefiting from powerful structural trends, from rising workplace attendance and expanding healthcare outsourcing to growing investment in AI data centres, defense infrastructure and premium sports venues. Those aren’t short-term tailwinds but multi-year opportunities that should continue to support demand. While higher food and energy costs remain a consideration, management’s decision to reaffirm its guidance reflects confidence that strong execution, pricing discipline and ongoing margin improvement will continue to keep Compass a step ahead of the competition.”

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