Shares of Diploma, the London-listed technical distributor, advanced 1.5% on Monday, trading at 7,305 pence by mid-morning in London. The stock opened at 7,240 pence and reached an intraday high of 7,310 pence, remaining well above its 52-week low of 4,970 pence but still below the yearly peak of 7,755 pence.
J.P. Morgan upgraded its rating on Diploma from neutral to overweight, citing the company's stronger-than-expected earnings trajectory. The broker also raised its December 2027 price target to 8,250 pence, a significant increase from its prior December 2026 target of 5,760 pence. Adjusted earnings per share estimates were similarly revised upward, with fiscal 2026 estimates lifted by 14.6% to 253.98 pence and fiscal 2027 estimates increased by 14.7% to 263.65 pence.
Diploma reported robust first-half performance, with organic growth accelerating to 15% and total revenue expanding 17%, including a 3% contribution from net acquisitions. Operating margin expanded by 300 basis points to 24.5%, while earnings per share growth reached 36%. J.P. Morgan noted it had "underestimated Diploma's earnings revision capacity in 2026," reflecting confidence in the company's near-term profitability.
The broker expects organic growth to normalize in fiscal 2027, aligning with its long-term average of around 6% after two years of exceptional performance. Diploma's stock movement contrasted with broader market trends, as the FTSE 100 traded flat near 10,812 points, with mixed sector performance. Basic resources provided support, while energy weighed on the index. AstraZeneca, a major component of the FTSE 100, declined nearly 1%.
