Broker tips: AB Dynamics, Diageo
By Iain Gilbert
Date: Wednesday 29 Jul 2026
(Sharecast News) - Analysts at Berenberg lowered their target price for AB Dynamics to 1,700p on Wednesday, down from 2,060p, citing a more challenging automotive industry environment and lengthening procurement cycles that have delayed FY26 revenues.
Berenberg's downgrade follows AB Dynamics' profit warning on 28 July, with the company flagging weaker customer confidence, geopolitical logistics headwinds and programme delays among European OEMs. While the sales pipeline and enquiry levels remained healthy, Berenberg said customers were pushing back procurement decisions, slowing order conversion across AB's testing products and simulation divisions.
The German bank also highlighted AB Dynamics' decision to exit its VadoTech Chinese testing services business after agreeing with a European OEM to terminate the underperforming contract. VadoTech will be treated as a discontinued operation in FY26, with the transition expected to complete in H127.
For continuing operations, AB Dynamics now expects FY26 revenue of £90m to £95m, with deliveries heavily weighted to year‑end and working capital finishing higher than anticipated. Adjusted operating margins were still seen at 20%, in line with the firm's medium‑term plan.
Berenberg added that AB Dynamics' strong balance sheet provides resilience and optionality for mergers and acquisitions, and stated that at a 12.4x FY26 price-to-earnings ratio and a 8.9x enterprise value/underlying ratio, the shares already reflect recent downgrades, with long‑term drivers contrasting sharply with the current industry slowdown.
Berenberg also kept its 'buy' rating on the stock, arguing that valuation support and the group's strategic positioning remain intact despite near‑term disruption.
Deutsche Bank downgraded drinks maker Diageo to 'hold' from 'buy' on Wednesday following the stock's recent outperformance.
The bank noted that since it upgraded the shares at the end of March, they were up 22%, outperforming the Stoxx 600 food and beverage index by 11%.
Deutsche said its underlying estimates were broadly unchanged and its price target remains 1,700p on an unchanged DCF methodology despite rolling its valuation to FY27 from FY26.
It also noted that Diageo was due to report FY26 results and provide a strategy update on 6 August, stating its expectations were unchanged and that it continues to expect FY26 to be in-line with consensus with a "reset" in FY27 to drive competitiveness.
"However, there is a broad range of potential outcomes with greater downside than upside risk, in our view," said DB. "We continue to believe consensus expectations for both FY27 and beyond remain materially too optimistic (DB EPS 10% below Bloomberg consensus)."
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