Broker tips: Halma, Weir, Smiths, Admiral, Phoenix, JD Sports
By Iain Gilbert
Date: Wednesday 21 Jan 2026
(Sharecast News) - Analysts at Berenberg took a fresh look at the UK capital goods sector on Wednesday, stating 2026 would likely see the acceleration of fiscal dominance among key global geographies with geopolitics, and fiscal support driving strategic industry growth to varying degrees in many jurisdictions.
On the company level, Berenberg raised its target price on Halma from 3,750p to 4,200p on Wednesday, stating it was "arguably the highest-quality company" in its UK industrials coverage, and that it sees "substantial long-term value" in the group's decentralised growth model and ability to invest for growth and deploy capital throughout its end-market exposures.
The German bank said Halma's focus on key growth themes in safety, environment and healthcare, along with "strong market positions in target niches", drive "a highly attractive compounding financial framework", which can drive double-digit earnings progression on an annual basis from a combination of organic and inorganic growth. It also said this "attractive" structural testing, inspection and certification growth exposure, high US exposure and pricing power underpin ongoing growth.
As far as Weir was concerned, Berenberg said the firm's strategy, focused on mining technology, had aligned the group with "key structural growth themes" in electrification and energy transition mineral demand, which provide long-term structural growth and should drive premium earnings growth over time.
Berenberg also upgraded Smiths from 'buy' to 'hold' and raised its price target from 2,750p to 3,000p, pointing out that the group was at the start of a process to release "significant value for shareholders and make substantial cash returns over the next 12-24 months".
However, Berenberg noted investor scepticism over the Smiths' medium-term growth targets, but said a net cash balance sheet post-divestments provides significant capital allocation optionality for shareholder value creation.
Goldman Sachs downgraded Admiral but upgraded Phoenix on Wednesday as it took a look at the European insurance sector.
Admiral was downgraded to 'sell' from 'buy' and its price target was cut to 2,920p from 3,954p, with Goldman noting that it upgraded the stock to 'buy' in July 2025 as it expected an inflection in pricing trends based on ONS data available at the time.
"This inflection, however, has yet to materialise," it said. "In addition, we are now lapping periods of frequency improvements, and as a result we expect burn costs to increase. Pricing versus burn-cost dynamics therefore read negatively for margins into 2026, where we reduce our earnings per share estimate by circa 17%."
Goldman also said that peripheral risks have been emerging, including rising commodity prices and chip shortages, which could increase claims inflation, and the introduction of autonomous vehicles, which could result in shifting profit pools over the long term.
In the same note, Goldman upgraded Phoenix to 'neutral' from 'sell' and lifted its price target on the stock to 752p from 593p based on what it now sees as lower downside risk on leverage and shareholder's equity.
It said Phoenix provides one of the highest capital generation yields in the sector - 14% versus sector average of 10% - and also generates circa £0.5bn of excess cash per annum. Goldman also said it believes that M&A could further help here.
"In our view, while leverage and shareholders' equity have been the main debates, the market responded well to the company's actions to partially address these, driving this performance," GS added.
Shore Capital has kept a 'hold' rating on JD Sports Fashion given the "muted outlook" for the sports apparel retailer next year, but said it sees a number of positives in Wednesday's trading update.
Fourth-quarter sales at JD Sports slipped further during the Christmas period as a return to growth in North America - the retailer's biggest market - was offset by a weak performance in the UK and Europe amid a volatile consumer environment.
Group like-for-like sales fell 1.8% in the nine weeks to January 3, compared with a 1.7% decline in the previous quarter. Within this, North America LFL sales rose 1.5% after falling 1.7% in the third quarter, while UK and Europe LFL sales were down 5.3% and 3.4% respectively with trends worsening over the three-month period.
"We spoke last week about JD's need to build confidence and deliver on guidance and today's results, whilst still seeing LFL decline, are very much in-line with expectations and so, in our view, good progress on these objectives. LFL sales declines slowed slightly versus the previous three quarters and a return to growth in the key US market is very encouraging," Shore Capital said.
The broker also highlighted "commendable" strong balance sheet and cash generation, with the company guiding to £400m of free cash flow this year, which should support further shareholder returns following the £200m of share buybacks during FY26.
The stock's current valuation is "undemanding", Shore Capital said, though investors may want to "keep cautious for now" due to an uncertain outlook for FY27, on the back of weak consumer spending and key partners like Nike still being in the earlier stages of pipeline innovation.
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