Davy Morning Equity Briefing
Mar 25, 2026
Airlines
The Sun Also Rises: where to go from here in aviation
In our January 14th report, “The Sun Also Rises”, we argued that the aviation industry may have lost nearly half a decade of growth (almost a ‘lost generation’) during the pandemic, but we believe we are in the middle of an upcycle. We are in a golden period. We think that industry supply issues have troughed but will only slowly improve. The Original Equipment Manufacturer (OEM) deliveries are increasing, but engine issues continue to constrain the market. Has the situation in the Middle East upended this? We attach our latest industry presentation here. We outline the issues in the Gulf, stock exposures and sensitivities. If the ‘COVID generation’, consumer demand and US airlines are proven correct that earnings are relatively resilient, the prize will be a re-rating of the very low multiples (below pre-COVID) on which the airlines trade. As ever, the summer season will be key. We will further explore these themes at our 18th London Transport conference, which will take place on June 25th at the Davy office in Gresham St. Paul’s, London.
Ingredients
Q1 model updates – slow start to 2026 expected in an uncertain environment
Ahead of Q1 results, we update our Givaudan, Symrise and Kerry Group models. Top-line forecast changes reflect a subdued consumer environment, with the conflict in the Middle East introducing additional uncertainty. Within our coverage for Q1, we expect Givaudan to deliver the strongest organic growth in Fragrance, while Kerry Group is set to lead on Taste. We see limited valuation risk from current levels, while recognising the sensitivity of the sector investment case to revenue development. The key sector debate centres on revenue progression for 2026 congruent with the risk of demand/supply-chain disruption from the Middle East conflict. Givaudan kicks off results season for the sector on April 14th.
dsm-firmenich
Key takeaways from Investor Day
With its portfolio transformation complete, the emphasis shifts to growth execution. A roadmap to 2028 was presented with revenue and margin targets unchanged. The mid-point of 2028 guidance implies c.30% EBITDA growth from 2025 – backend weighted. A recovery in end-markets is central to accelerating topline growth from 2027. The pathway to improving equity performance will be slow as the business grapples with a challenging and volatile environment. We maintain our ‘Outperform’ rating and lower our price target to €74.40.
Kenmare
FY2025 results
Kenmare’s revenues declined by 20% in 2025 reflecting lower production and prices, which impacted earnings. It has reiterated production and shipment guidance for 2026. We expect this to be the fourth year in a row in the latest downcycle, but we are beginning to see signs of improvement in supply/demand trends.
UK economy
Services inflation in February came in above expectations
This morning’s UK inflation result for February was always likely to be discounted by markets given it reflects the economy prior to the ongoing Middle East conflict. However, the details suggest that while the UK economy was still broadly on a disinflation path early in 2026, some aspects of higher consumer prices remain sticky. Services inflation in particular was above what the Bank of England (BoE) had expected in its latest projection last month. Nonetheless, a considerable decline is still likely from April when prior Budget measures fall out of the annual comparison.
