Davy Morning Equity Briefing
Mar 19, 2026
Grafton Group
Expands Iberian presence with attractive Mercaluz acquisition
Grafton has followed up on the recent Cygnum acquisition with another deal. This time it is acquiring the Spanish-based Mercaluz for up to €175m at an attractive valuation of around 8x last year’s adjusted operating profit. Strategically, the deal ticks all the right boxes and extends Grafton’s presence in Iberia in a meaningful way.
Cairn Homes
Increasing price target to 271c
Operating profit forecasts are c.5% higher across the investment horizon in our new estimates this morning. This increase, combined with a higher level of returns, has driven a 12% increase in our price target to 271c, suggesting share price upside of c.16% from current levels. We reiterate our ‘Outperform’ rating.
Diploma plc
Upgrading forecasts
Following the positive trading statement issued yesterday (March 18th), we are upgrading our Diploma forecasts. We increase the expected rate of organic revenue growth and our margin forecasts each year. We increase our FY2026 EPS by 10% to 220p. We raise our price target to £62/share and maintain our ‘Neutral’ recommendation.
Irish economy
Early signs of a moderation in 2026 residential property prices
January’s gain in residential property prices was half as big as the increase in December. This is consistent with our expectation that price increases will moderate this year given our forecast that housing output will again grow by close to 20% in 2026. However, this is in the context of continued economic growth alongside pent-up demand, which is likely to remain into the 2030s.
