Davy Morning Equity Briefing

Oct 21, 2026

SigmaRoc plc

Confidence in FY26 reiterated

SigmaRoc's (SRC) Q3 trading update offers little in the way of surprises, which in itself should be viewed positively. Revenue, EBITDA and margins continue to move in the right direction, while end-market commentary is broadly consistent with H1. With full year expectations unchanged and consensus forecasts appearing achievable, the update is consistent with the steady operational execution seen over the past 12 months.

Flutter Entertainment plc

UK restructuring underpins mitigation

Flutter issued a press release yesterday (October 20th), confirming a significant restructuring of its UKI business. The restructuring is due to the significant tax increases implemented by the UK government. In November of last year, Flutter guided to a $540m gross impact from the Budget and first-order mitigation of $201m in FY27. This programme forms part of the first-order mitigation. It also references that this supports delivery of second-order impacts. We are not aware of the average salaries and note that the job cuts are spread across a number of geographies; however, making a very broad assumption, it seems that this programme will deliver the majority of the first-order savings. On this basis, Flutter can continue to invest in the UK. This should lead to market share gains (second-order effects), particularly given how distressed smaller operators will be. Although this is clearly a very difficult time for Flutter and its staff, it does show evidence of cost discipline and delivery against plan.

Hostelworld

Forecast updates post recent trading statement

We update our Hostelworld forecasts to reflect the greater-than-anticipated impact on booking volumes from the conflict in the Middle East. This initially impacted Europe to Asia/Oceania, but more recently it also saw some volume impact on long haul between Europe and the Americas. It also alluded to a modest impact from lower organic web traffic as AI answered more searches. The company is now guiding to c.10% net revenue growth for FY26 and mid-single-digit growth in FY27. We reduce our EPS by 11% in FY26 and 23% in FY27. The refreshed targets from management now seem more attainable. Consistent execution against these will be essential to a re-rating.

UK economy

Inflation up to 3.5%, but second-round effects remain absent

This morning’s UK inflation data are mildly hawkish, as were the labour market figures already published this week. However, the big picture remains that there is still very limited evidence of second-round effects of the energy price increase. While a Bank Rate hike at next week’s monetary policy meeting is now a certainty, we see limited need for Bank Rate to remain at or above 4% over the medium term given the UK economy’s fundamentals.