September Slump – 3 share ideas to consider if markets stall

Airbus

Airbus offers a way to tap into the growing demand for air travel and rising global defence budgets.

Building aircraft is its bread and butter, accounting for 70% of the group’s €29.6bn first-half revenue. Given it only has one major competitor, Airbus enjoys favourable market dynamics, with the split roughly 60/40 in its favour.

Incredibly complex supply chains help to keep outside competition at bay.

But it’s also a double-edged sword.

Some of Airbus’ suppliers have struggled to keep up with demand of late, and that could have a knock-on effect on Airbus hitting its production targets.

The group’s hoping to have around 820 commercial aircraft flying off the production line this year, but a slow start in the first half has dampened investor sentiment. While management remains confident that the pace will pick up, we see scope for Airbus falling slightly short of its full-year target.

That’s not a major issue in our eyes. Improvements in the Defence & Space division are helping to pick up some of the slack, returning to profitability in the first half after a tough period of write-downs. With Europe looking to ramp up its defence spending in the coming years, we think Airbus looks well placed to capture some of the rising demand.

The balance sheet is in great shape, with net cash standing at €7.0bn. That means regular dividend payments are well covered, and we see scope for increased shareholder returns if cash levels improve further. But remember, shareholder returns can vary and are never guaranteed.

The valuation sits a touch above the long-run average, but we don’t see that as too demanding given its market position and strong demand outlook. If Airbus can iron out supply chain issues, there could be a long runway of growth ahead. But execution risk and the uncertainty surrounding tariffs mean there could be some turbulence along the way.

GSK

Speaking of slumps, GSK’s valuation has been on a downward trend in recent years, and it now sits towards the bottom end of its peer group on a forward price-to-earnings basis.

We think that’s unjustified given the group’s improving underlying performance.

First-half results benefitted from a recovery in vaccine sales, which is expected to continue over the rest of 2025. Alongside impressive growth in HIV treatments (around 24% of revenue) and cancer medicines, full-year revenue and profit guidance were upgraded slightly.

Zooming out, the healthcare giant also stands to benefit from long-term megatrends like an ageing global population. With senior citizens keen to maintain a good quality of life into their later years, we expect demand for GSK’s services to keep rising for some time.

A strong clinical pipeline of therapies underpins GSK’s hopes of 14 new product launches over the next six years, each with peak annual sales potential of over $2bn. There are no guarantees, but we think there could be some upside to the 2031 revenue target of £40bn (2024: £31.4bn).

Despite the potential, sentiment towards the pharmaceutical sector remains weighed down by tariff concerns and the possibility of further US legislation to cut drug prices.

We think these concerns are a touch overdone. This year’s guidance already reflects existing tariffs, and GSK’s exploring supply chain adjustments to manage future changes to import and export charges.

Drug pricing reform is the bigger risk in our eyes, but Donald Trump’s proposals still face significant hurdles. Until there’s more clarity, expect volatility to remain higher than usual.

The balance sheet is in good shape, and there’s a respectable 4.6% forward dividend yield. As always, no shareholder returns are guaranteed.

Alongside an attractive valuation, GSK remains one of our preferred names in the healthcare space. But the risk of failure in drug development can be high, which could weigh on the group’s future growth potential.

LSEG

London Stock Exchange Group (LSEG) is another name that’s found its valuation come under some pressure in recent times. Besides being a stock exchange, it’s a global leader in financial technology and data. The group earns most of its revenue from providing tools and services that financial professionals rely on daily.

On the whole, recent results have been pretty good. All divisions are growing revenues, and thanks to tight cost controls, underlying operating profits rose at an impressive rate of more than 13% to £1.7bn in the first half.

However, markets have become concerned about slowing annual subscription value (ASV) growth in Data & Analytics division. Think of these as recurring revenues, with the slowdown being driven by competitors slashing their prices to win more business.

LSEG’s management seems confident that this pricing action isn’t sustainable for competitors. But in the near term, it will weigh on the group’s ability to drive price increases when existing customers' contracts come up for renewal.

The group isn’t a one-trick pony, though.

It also generates revenue from services like clearing and settlement, which help ensure that financial transactions are completed smoothly. This variety of income streams makes LSEG’s business more resilient during market ups and downs.

We think LSEG’s on the cusp of realising the benefits of several years of heavy investment. New technology like AI is being built into its products, which should enhance its competitive position, while also leading to efficiency gains as it scales up.

The partnership with Microsoft is starting to come to life too, with LSEG’s analysis products integrated into programs like Excel and Teams, increasing their appeal. The more seamless its functionality becomes with clients’ current systems, the harder it becomes for existing clients to switch away.

All in, we see LSEG as a strong player in the space, backed up by impressive financials. We view the current valuation weakness as an opportunity. But competition is likely to remain fierce in the near term, so potential investors will need patience.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss. Yields are variable and not guaranteed.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.