Davy Morning Equity Briefing
May 20, 2026
Capital Goods
Shifting into ‘Neutral’
We complete our shift to ‘Neutral’ on the sector by lowering our recommendation on IMI to ‘Neutral’ from ‘Outperform’ following a period of strong performance. We highlight a potential opportunity in Weir. We increase our price targets on IMI and Hill & Smith to £28 and £26 respectively and lower our Weir price target to £25.
Stelrad Group plc
Another solid update
Stelrad has issued a short trading update ahead of its AGM and has revealed that trading year-to-date is in line with management expectations. The group has also indicated that its full year outlook is unchanged, an encouraging signal in the current environment. The stock, down 4% year-to-date and has held up better than many peers, remains attractively valued at a 2026 P/E of <10x and an EV/EBITDA of circa 5x.
Dole plc
Model update – Middle East impacts; shares remain undervalued
We are lowering our FY26 and FY27 adjusted EBITDA forecasts by c.4% and c.2% respectively, reflecting the knock-on impact of the Middle East conflict and the lagged nature of recovery mechanisms. Despite the prevailing macro headwinds, we believe Dole has become materially de-risked from both an operational and financial perspective. In our view, the group is now well positioned to invest for growth over the short to medium term, with tangible evidence of increased investment activity likely to be an important catalyst for a re-rating of the equity, which continues to trade at a significant discount to peers. We maintain our ‘Outperform’ rating and $21.5 share price target (c.50% upside).
UK economy
April inflation hits our forecast for another dovish surprise
April’s inflation fell to 2.8%, below consensus and matching our forecast. Core inflation also declined to 2.5%, with services inflation down to 3.2%. The results follow yesterday’s (May 19th) dovish surprises to UK labour market data, and there has been a subsequent softening of market pricing for increases to Bank Rate this summer. This is all closely aligned to our expectations as set out earlier this month in our UK economy insights report, ‘Escaping two lost decades’, May 6th 2026.
