FTSE 100 shares round-up: more upgrades plus a takeover trigger
A company that keeps exceeding expectations has done it again, while a massive takeover premium on the mid-cap index has implications for these blue-chip names.
16th July 2026 13:01
by Graeme Evans from interactive investor
The “Beat, Raise, Repeat” record of Diploma (LSE:DPLM) today shone in the FTSE 100 as traders also turned their attention to IMI (LSE:IMI), Spirax Group (LSE:SPX) and Weir Group (LSE:WEIR) in the wake of a £4.1 billion takeover.
Quality compounder Diploma led the blue-chip benchmark following a rise of 295p to 7,065p, having upgraded its guidance on September year-end results for the third time this year.
Organic revenues are now on track to improve by 14% as the group of controls, seals and life sciences businesses continues to reap the benefit of its structurally growing end markets, which include defence, nuclear power and data centres.
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Morgan Stanley said the extent of the upgrade was much more than it had expected as Diploma also lifted its operating margin guidance to 26.5% from the 25% forecast in May.
The bank is Overweight on Diploma shares with a price target of 8,250p, while Deutsche Bank has reiterated its Buy rating with a new estimate of 7,500p following today’s update.
The shares were 2,600p in 2022 but have since soared into the FTSE 100 index as the company continues to strike a balance between ambitious earnings growth and disciplined returns.
Its acquisitions have been an important part of the success story after 57 deals worth £1.6 billion completed since 2019 collectively generated returns over 20%.
Flagship businesses now thriving within Diploma’s decentralised model include Chicago’s Windy City Wire, which makes premium low-voltage wire and cable.
Today’s update lifts the City’s operating profit expectations by another 7% to about £485 million, with earnings per share of 255p now implying 40-45% growth on a year earlier.
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Diploma had been trading on 28 times forecast earnings, but this is likely to drop to 26 times based on today’s new guidance.
Morgan Stanley sees consensus for 2026-27 operating profit moving to £490 million, which assumes 6% organic growth, 4% growth from acquisitions and a margin nearer 24%.
Stifel added this morning: “This is another positive update from Diploma following the upgrades in March and May. While we had anticipated a further upgrade to the organic growth guidance given the group's strong momentum, the increased margin guidance is a positive surprise.”
Diploma boasts a 25-year record of dividend growth, which is based on a policy of increasing the payout by 5% each year. Its most recent interim award of 19.1p was paid on 12 June.
Elsewhere on the FTSE 100 risers board, engineering-focused stocks were fired up by the 73% takeover premium secured by the board of mid-cap flow control business Rotork (LSE:ROR).
The read-across to the £4.1 billion deal lifted fluid and motion control business IMI by 70p to 2,944p and thermal energy and fluid technology solutions business Spirax by 225p to 6,875p.
Weir, which supplies the equipment and spares needed by mining customers to extract metals in a more sustainable and efficient way, rose by 86p to 2,494p. Weir shares are 30% below their level prior to the start of the Middle East war, with Spirax 13% lower and IMI broadly flat.
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The proposed acquisition by Sweden’s ABB Ltd (OMX:ABB), which was pitched at 503p a share plus 3p dividend, comes as the UK stock market continues to lose companies at a faster pace than new arrivals.
This year’s targets have included FTSE 100-listed Schroders (LSE:SDR), Beazley (LSE:BEZ) and Intertek Group (LSE:ITRK), as well as the FTSE 250’s Tate & Lyle (LSE:TATE), easyJet and Senior (LSE:SNR). Overseas bidders represent about 62% of the total.
Bath-based Rotork, which joined the London Stock Exchange as Rotork Controls in 1968, said the offer from ABB reflected the “high quality” of its business and recognised the significant progress already delivered through its growth strategy.
It also provided an “attractive opportunity” for Rotork shareholders to accelerate value creation from the company’s strong future prospects.
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