DAVY VIEW

We are increasing our FY26 adjusted operating profit forecast by c.4% to c.£240m, partly reflecting stronger self-help-driven profit conversion across both underlying businesses. We retain our forecasts for £15m of in-year synergies in FY26 and £103m of run-rate synergies by FY29. In our view, the principal concerns that emerged following the interim results have now been addressed, while recent execution indicates that the group is in an incrementally stronger position. Despite this, the shares continue to trade at a discount to both historical levels and relevant peers, with limited value ascribed to the remaining synergy opportunity. We maintain our 360p price target (c.45% upside).