UK&I Daily Focus: Monday, 18th May 2026

Research evidence excerpt

UK&I Daily Focus: Monday, 18th May 2026

ong underlying LFL momentum seen in the business that is

translating into EBIT margin recovery. We expect this to continue, driven by better

AUR and sustained brand heat, where Burberry has the most visible improvement.

Valuation at c.19x Cal 27E PE and moderate consensus expectation (cons FY27E

LFL +5.8%, DBe +6.6%) provides upside risk to earnings. As we head through FY27

we expect Burberry to continue to deliver quarter on quarter LFL improvement as

we saw throughout FY26. We lower our LFL assumptions slightly but increase

gross margin and marketing opex which sees our FY27e adj EBIT increase by +4%

but FY28e lower by -5%. We maintain our 1480p price target and re-iterate our Buy

recommendation.

SECTOR UPDATES

BUSINESS SERVICES WEEKLY - The Service Station

David Brockton: Intertek’s acceptance of EQT’s £60 per share cash proposal and

a potential proposal for DCC continues a de-equitisation of the UK market, not

currently replaced by new issuance. In addition to a number of recent takeouts in

the Services sector, over 60% of our coverage have now repurchased their own

shares through buybacks over 5 years highlighting low valuations, low financial

gearing and the cash generative nature of low-capital intensive services business

models. As stated in our 2026 outlook note we believe the Services sector overall

has attractive fundamental characteristics, largely disregarded at current valuation

levels. The sector typically provides services that are essential or have limited

cyclicality and good long-term growth prospect, alongside capital-light and cash

generative models that have scope for compounding deployment of capital into

large fragmented growing end-markets. Those that remain continue to offer

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