FTSE stuck in the mud, International Consolidated Airlines flies higher, British American Tobacco reassures, TUI celebrates record year, Kainos shares jump after bringing back its former CEO

“The FTSE 100 extended yesterday’s losing streak with a further 0.3% decline to 8,253 as oil, pharma and banks dragged the market down,” says Dan Coatsworth, Investment Analyst at AJ Bell.

“After a good start to the year, the UK index has stubbornly remained in a small trading range since June.

“Despite the overall market being stuck in the mud, there were a few standout names pushing ahead. International Consolidated Airlines is having a whale of a time on the stock market this year and its shares just hit their highest level since March 2020 thanks to a ratings upgrade from Deutsche Bank.

“Endeavour Mining perked up after announcing promising results from a pre-feasibility study (PFS) on a project in West Africa. While there is still a lot more work required to understand the potential of the asset, the PFS provides an early indication of the project economics and they appear good enough for Endeavour to push to the next stage.”

British American Tobacco

“Despites pressures around tighter regulation, healthcare issues moving up the agenda and governments taking steps to stop young people vaping, British American Tobacco continues to grow its sales and profits.

“Even though tobacco industry sales are slowly declining, it’s only by a small amount and next-generation products such as vaping are filling the gap.

“Admittedly, growth rates for next generation products haven’t been as strong as some companies would have liked, yet the transition from old to new continues to make progress.

“Expectations have been readjusted and more investors are warming to the sector again, as evidenced by British American Tobacco’s shares enjoying a good run this year following a miserable period on the stock market.

“Plenty of investors won’t go anywhere near the sector for moral reasons but there are others who see the opportunity to make money. Just the like oil sector lost fans during the wave of interest in all things ESG a decade ago and then regained supporters, it looks like the tobacco/vaping sector is doing the same.

“It’s not that simple. The headwinds for the tobacco/vaping industry must not be underestimated, namely the push for a healthier society and governments eyeing the sector as a source of greater tax. That makes shares such as British American Tobacco higher risk than some investors might consider.”

TUI

“It’s been a fantastic year for TUI as consumers prioritised experiences over material goods – namely, they’d rather go on holiday than hit the high street. Package holidays and cruises were standout areas for TUI in 2024, helping to strengthen its finances and put the business in better shape.

“The outlook remains bullish, albeit with guidance for a lower rate of sales and earnings growth. It’s not that people don’t want to go on holiday, it’s more about affordability and TUI needs to uphold its reputation for offering people good value for money.

“TUI needs to invest in its business to keep it fresh and relevant to holidaymakers and there is an argument to say it is still playing catch-up in this area versus rivals.”

Kainos

“A chief executive presiding over a gradually declining share price only has so long to fix the problem before shareholders or the board of directors push for change at the top. It looks like time ran out for Kainos’ CEO, Russell Sloan, who has left with immediate effect. He was only in the top job for just over a year.

“Bringing back the previous CEO has gone down well with the market as Brendan Mooney is a known entity. He is seen as a trusted pair of hands who knows the business inside and out.

“The big unknown is whether Mooney has been brought back on a temporary basis as a ‘Mr Fix It’ or if he’s in it for the long haul.

“Mooney previously announced his departure 18 months ago, saying it wasn’t an easy decision to make, but implying that, after 22 years as CEO and 34 years with the company, it was time to pass the baton to someone else. Mooney expressed confidence in Sloan at the time, but it looks like the latter wasn’t the right fit, despite having been with Kainos for a quarter of a century.

“In Sloan’s defence, he presided over a tough period for the company, with uncertain economic conditions leading to delays in client decision-making and a nasty profit warning two months ago.”

These articles are for information purposes only and are not a personal recommendation or advice.