Shares round-up: market reaction to Hays and Diploma updates
One of these companies desperately needs some good news, while the other needs something to further justify its high rating. City writer Graeme Evans reveals if they got their wish.
14th January 2026 15:04
by Graeme Evans from interactive investor
The new year has brought no change in fortunes for Hays (LSE:HAS) and Diploma (LSE:DPLM) after the recruiter’s shares slumped below 50p, and the quality compounder traded at record levels.
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An update by Hays today offered few signs that it is any nearer to emerging from the sector’s longest hiring downturn in two decades, with net fees down 10% in the second quarter of its financial year.
The deterioration from the previous quarter’s 8% reverse included the impact of continued weakness in average hours worked in the company’s biggest marketplace of Germany.
UK net fees fell 9% in the period, when political events such as the Autumn Budget and interest rate uncertainty are likely to have impacted demand for Hays’ services.
The company continues to focus investment in high-performing and potential business lines, as well as improving productivity in more challenging business areas.
Chief executive Dirk Hahn said: “With our continued actions to reposition the business, I remain confident that we will benefit materially when markets recover.”
The shares have already lost 12% this year, continuing their descent from 2021’s 175p amidst a protracted three-year downturn in trading conditions and fears over AI job displacement.
The highly cash-generative business dealt a fresh blow to shareholders in August when annual results included a big dividend cut alongside a 66% slide in underlying profits to £32.2 million.
It rebased the total dividend from 3p in 2024 to 1.24p in 2025, with November’s distribution of 0.29p calculated on three times 2025 pre-exceptional earnings cover.
UBS, which has a price target of 70p, left its forecasts unchanged today amid hopes that fee declines are beginning to stabilise. It said Hays is still on a historic trough valuation, compared with its previous through-cycle range of 1x-2.5x enterprise value-to-gross profit.
Diploma shares have carried on this year where they left off in 2025, with today’s performance boosted by a “very strong” first quarter trading update.
The FTSE 100-listed business, which has grown adjusted earnings per share at an average rate of 18% in the past seven years, recorded organic revenue growth of 14%.
Amid expectations for a first-half weighted performance, Diploma reiterated revenue growth and margin guidance at 6% and 22.5% respectively.
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It also said it had completed four acquisitions worth £75 million in attractive end markets, including one that boosts its reach in the European aerospace fasteners market.
The group’s portfolio of businesses in seals, controls and life sciences create solutions that make customers’ lives easier, with the value far greater than the cost of the product. Flagship businesses within Diploma’s decentralised model include Chicago’s Windy City Wire, which makes premium low voltage wire and cable.
Annual results in November highlighted “another great year” as annual organic revenues growth topped expectations at 11% and it improved the operating margin by 160 basis points to 22.5%.
It also extended a 25-year record of dividend growth by announcing a 5% higher total for the year of 62.3p a share, including plans to pay 44.1p a share on 30 January.
The group, which has a market value of £7.5 billion having joined the FTSE 100 index in 2023, today touched a record 5,760p in early dealings before settling 10p higher at 5610p.
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In a note published yesterday, City firm Berenberg lifted its price target on shares to 6,600p from 6,350p previously.
Naming Diploma as one of its top picks of the business services sector, the bank said: “We continue to favour companies that drive their own destiny and grow earnings regardless of markets, under quality compounding models.”
Meanwhile, Bank of America raised its price target to 6,300p to reflect new estimates and an increase in its price/earnings multiple to 31 times from 30 previously.
It said today: “We reiterate our Buy on attractive organic growth and margin outlook and strong free cash flow profile.”
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