Broker tips: Jet2, Shawbrook, Grafton
By Iain Gilbert
Date: Wednesday 08 Jul 2026
(Sharecast News) - Canaccord Genuity has lowered its target price for Jet2 but kept a 'buy' rating on the stock, saying the holidays group has the potential to grow its market share while it maintains a strong balance sheet.
Results from the travel operator on Wednesday delivered results in line with expectations, with adjusted profit before tax falling 6% to £544.6m over the year to 31 March on the back of weaker margins, but revenues rising 4% to a record £7.48bn.
Canaccord Genuity, which cut its target price for the stock from 1,900p to 1,750p, said it has raised its FY27 projections due to a better cost outlook and strong load factor (percentage of available seating capacity filled).
"We project FY28 to see a return to nearer to historical PBT margins, but now slightly dampen these due to the economic, fiscal and consumer risks from an untested potential new UK Prime Minister," said analyst Damian Brewer.
Nevertheless, the broker said it sees "strong share growth potential" as it penetrates the southern half of the UK.
Meanwhile, following Jet2's announcement of a £250m share buyback for FY27, Brewer said the company could have even more capital potentially available to allocate in the future, given its strong cash generation and headroom with current debt facilities.
RBC Capital Markets initiated coverage of Shawbrook on Wednesday with an 'outperform' rating and 475p price target, stating it thinks the market has mispriced the whole specialty lender sub-sector, which has been trading at the lowest valuation in the last decade.
"In our view SHAW has better tech, greater diversification and will grow faster than peers over the medium term," it said. "However, we prefer Paragon & OSB versus SHAW because: (i) we are ahead of consensus; (ii) there is no PE overhang; (iii) they are expected to deliver higher value creation and total shareholder return yields; (iv) they do not have securitisation risk; and (v) they have a better cost profile."
RBC noted that Shawbrook has performed around 25 transactions over 15 years. It has identified a top 10 M&A target list for the company after reviewing around 180 specialty lenders using a five factor framework and its proprietary methodology.
RBC said that unlike consensus, it has embedded M&A into its model and estimates that Shawbrook will grow faster than peers.
RBC Capital also believes political risk has been overly discounted. "Although some landlords are pressing pause due to volatile rate expectations, the environment remains constructive, with demand materially higher than supply and continuing professionalisation," it said. "Landlords will adapt to any changes in the upcoming budget, passing on headwinds to renters."
RBC said it appreciates that opening a deposit account only scratches the surface of a bank's technological capabilities, "but for a metric that is very hard to access from the outside, it is a start".
Finally, RBC added that it does not expect Shawbrook to acquire Aldermore as per recent press reports.
Analysts at Berenberg lifted their target price on builders merchants Grafton to 1,150p from 1,000p on Wednesday, saying stabilising earnings forecasts and balance‑sheet flexibility supported a re-rating of the shares.
Berenberg said consensus earnings per share expectations had steadied in recent months, which it believes could help unlock upside for a stock trading at 11x FY27 earnings, compared with the 14x multiple it sees as fair.
Management's long‑term ambition for more than 10% annual EPS growth to 2030 sits ahead of both Berenberg's and consensus forecasts, which currently assume around 6% a year for FY26-28.
The German bank said the gap could be closed through further bolt‑on acquisitions, supported by Grafton's strong balance sheet. It estimates the group could deploy around £130m a year on M&A while its keeping net debt-to-underlying earnings ratio comfortably within the 1-2x target range.
Berenberg also sees scope for up to £330m of additional borrowing over the forecast period, giving the group optionality for investment and buybacks.
Grafton's geographic spread was highlighted as a source of resilience, with stronger markets such as Ireland and Spain helping offset UK weakness.
Looking ahead, Berenberg forecasts 5% annual revenue growth for FY26-28, including recent acquisitions, and expects adjusted EBIT to rise around 5% a year, with margins nudging up from 7.3% in FY25 to 7.4% in FY28.
Berenberg added that Grafton's shares currently trade at 12x FY26 EPS.
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