Five shares to watch in 2025 – how have they started the year?

Airbus

Airbus’ full-year results back in February were largely as expected, with revenue flying higher as the group delivered 766 (2023: 735) commercial aircraft.

Profits took a small hit, though, as significant charges were booked in the Defence & Space division due to mispricing legacy contracts. That should be the reset needed, and we’re cautiously optimistic that it can contribute positively from here.

Guidance to deliver around 820 commercial aircraft this year disappointed markets at the time. And as expected, first-quarter deliveries got off to a slow start.

Tariffs are likely to weigh on production throughout the supply chain, so we wouldn’t be surprised if the delivery target gets lowered later in the year.

While tariffs are negative for the industry, the commercial aircraft market is dominated by just two companies, with the split standing at roughly 60/40 in Airbus’ favour.

Given the makeup of its supply chains and production locations, we believe Airbus is better insulated than its competitor, from both a cost and production standpoint.

Net cash of €11.8bn at year-end gave management the confidence to increase shareholder returns in the form of a special dividend. Despite this, there’s still plenty of cash on hand to help cushion any turbulence as the true impact of tariffs becomes clearer.

It’s a complex and fast-moving story, so we’re keen to hear if management’s tweaked its outlook when first-quarter results are released in late April.

Croda

Croda saw revenue fall marginally in 2024 as growth in its largest division (Consumer Care) was wiped out by declines in Life Sciences, largely due to a drop-off in COVID-19 related sales.

The latter are higher-margin than many of the group’s other products, so their absence meant underlying operating profits fell at a faster pace of 8.2%.

Customer destocking in crop protection is continuing, so we can’t rule out some more soft figures in the near term. But the investment case lies beyond these challenges, which we feel has masked a shift in the portfolio towards differentiated products and higher-quality businesses.

There’s impressive growth potential in the pharmaceutical businesses, and if that coincides with an end to the destocking, there could be a sharp uplift in profitability.

The direct impact of US tariffs on Croda’s operations looks limited. Under a quarter of Croda’s sales come from the region, and the vast majority of those are already produced in-country.

However, if tariffs lead to a global economic slowdown, demand for discretionary items like cosmetics, for which Croda is a key supplier, would likely weaken.

The balance sheet is in a good place, though, which should help it ride out a potential storm. Efficiency improvements should also offer an extra layer of protection. But we included this name for its turnaround potential, so investors should be prepared for some ups and downs along the way.

GSK

GSK managed to meet upgraded full-year targets back in early February, despite some weakness in its vaccine portfolio.

Its recent hit rate in the clinic has been impressive. While there’s no guarantee of continued success, recent milestones have driven upgrades to the medium-term outlook, with at least £40bn of annual sales expected by 2031 (2024: £31.4bn).

Recent US-led tariff policy could upset that target, though.

President Trump has stated his intention to apply tariffs to pharmaceutical products in a bid to bring production back to the US, boosting jobs. If that happens, there’s little scope to pass on price increases to customers in the near term, and GSK stands as one of the most exposed companies among its peers.

In the long term, the impact for GSK might not be so bad, as higher prices get factored into new deals with customers. However, given the vital nature of pharmaceuticals in treating serious illnesses, we see scope for them to receive more favourable tariff treatment than many other industries.

So when the dust settles, we’re cautiously optimistic that the impact on GSK’s bottom line might not be as bad as initially thought. Of course, there’s no certainty that things play out this way.

GSK’s balance sheet is in a strong position, underpinning a respectable 4.9% forward dividend yield. The valuation appears to already be factoring in a lot of these worries, and looks far less demanding than many of its peers.

London Stock Exchange Group (LSEG)

LSEG has held up relatively well in the first part of 2025, with results at the back end of February helping to squash some fears of a slowdown. Full-year results were strong, with management setting an upbeat tone on the outlook for some of its key growth drivers.

Investment in recent years is starting to bear fruit, and there are positive signs that as the top line grows, margins and free cash flow can expand at the same time.

The mix of transactional and subscription revenue has been a benefit, and we continue to think its low-volatility earnings will be attractive as uncertain macro conditions linger.

Looking ahead, LSEG is expected to keep growing as it integrates new technology like artificial intelligence (AI) and expands its offerings.

Plus, the partnership with Microsoft is starting to come to life, with LSEG’s analysis products integrated into programs like Excel and Teams, increasing their appeal.

We’ll be keeping an eye on new product rollouts over the coming year.

We’re mindful that new product launches carry risk, and competition among the top players in the data and analytics world is tough. As a software name, tariff and trade issues shouldn’t be a major issue, a global recession would be another story though.

Overall, we’ve been pleased with trends and continue to think LSEG offers a compelling investment case based on its improving returns profile and robust earnings. However, the valuation doesn’t leave too much room for missteps, adding pressure to deliver.

NVIDIA

It’s been a wild ride for NVIDIA in the first few months of the year as it’s been caught in the middle of a broader market sell-off.

Debate has swirled around whether the chip industry will be directly affected by Trump’s tariffs.

Recent commentary suggests that tech electronics (chips included) could face their own set of tariffs in the coming months. Uncertainty more than anything else has been a key factor behind the recent weakness in tech stocks.

Just last week, NVIDIA announced a $5.5bn charge in the first quarter, writing down the value of inventory and orders related to its H20 chip. These less powerful chips were designed specifically for the Chinese market to comply with export restrictions.

However, with a new set of US licensing rules now in place, it’s unlikely NVIDIA will be able to sell them – and they hold little value outside China.

All of this adds up to continued short-term volatility. But investors should be taking a longer-term perspective. NVIDIA remains the dominant player in accelerated computing and is a key enabler of global AI development.

With first-quarter results just around the corner, earnings will be hit from the H20 write-down, but we also expect strong underlying demand from NVIDIA’s core customer base.

Despite the macro challenges, we still think NVIDIA’s long-term outlook is compelling, and the valuation looks attractive – though, as always, nothing is guaranteed.

Members of the HL equity research team hold NVIDIA shares.