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(Sharecast News) - Analysts at Berenberg said Hiscox's "underpriced momentum" offered clear upside for investors, arguing the shares failed to reflect the insurer's accelerating top‑line growth and improving operating leverage.
Berenberg noted the stock trades on around 10x two‑year blended forward earnings - roughly a 10% discount to the sector - and said its target price pointed to about 20% upside from current levels.
The German bank highlighted the continued strength of Hiscox's retail division, describing it as the group's "crown jewel", with retail growth steadily accelerating in recent years - from roughly 4% in 2023 to 5% in 2024 and 6% in 2025 - and management now targeting 9% growth for 2026 - implying a step‑up from 8.2% in the first half to around 10% in the second.
Berenberg also said past investments were now paying off, with new products, distribution deals and partnerships supporting further gains, particularly in the US micro‑SME market, where new business formations were running about 20% higher year‑on‑year. It believes Hiscox could reach its double‑digit retail growth target for 2028 a year early.
Operating leverage was also said to be improving, with premiums up 10% in H1 while underlying expenses rose just 0.4%, pushing the admin expense ratio down to 16.1%.
Berenberg, which reiterated its 2,150p target price and 'buy' rating on the stock, added that Hiscox has room to increase financial leverage, with its ratio at 17.3% versus 29% in 2020, and said refinancing its 2027 bond could create scope for buybacks. Earnings per share forecasts were nudged up around 2% on lower costs.
RBC Capital Markets lifted its price target on easyJet to 715p from 600p on Monday, aligning it with Apollo's offer price and highlighting what it sees as further upside for the shares despite trimming near‑term estimates.
The Canadian broker said it had cut top‑line and fuel‑cost assumptions following easyJet's 30 June update, noting softer fourth‑quarter load factors and broadly flat ticket yields. Booked‑to‑date load factors for Q4 were running about 2% lower year‑on‑year.
Even so, RBC raised its valuation to match Apollo's £7.15‑per‑share proposal, implying a 1.5-1.6x FY26 price-to-net asset value multiple, noting that its previous 600p target was based on a ten‑year median of 1.3x P/NAV and set after Castlelake's approach but before Apollo entered the fray.
RBC said easyJet shares currently trade 6% to 7% below the offer price, adding that the discount likely reflects the time value of money rather than doubts over whether the takeover will proceed. RBC also reiterated its 'sector perform' rating on the stock.
JPMorgan upgraded Diploma on Monday to 'overweight' from 'neutral' and hiked the price target to 8,250p from 5,760p to reflect its view that it's a high-quality compounder, capable of sustaining double-digit earnings per share growth into the medium term.
"We have underestimated the earnings upgrade capacity of Diploma in 2026, with organic growth, margins and M&A all sources of upside YTD," the bank said. "Looking forward, we expect organic growth to moderate in FY27 (closer to the long-term average of circa 6% after two years of very strong growth) and margins to reduce from their FY26 peak (as spot pricing in Peerless is adjusted to position for continued volume growth); we see these trends reflected in both management commentary and consensus estimates, i.e. they should not be sources of negative surprises."
JPM said that while its forecasts include announced M&A only - in line with the approach across its coverage universe - the bank's M&A upside scenario suggests Diploma can deliver a double-digit earnings per share compound annual growth rate out to FY30 from a year-end September 2026 base.
"Absolute valuation multiples are at elevated levels relative to history, but not so on a relative basis versus a peer group of other decentralised compounders and US distributors, with whom Diploma compares favourably on growth and returns," it said.
JPM said the revised price target was in line with the average of its chosen peer group.
