JPM downgrades Diploma after 'surprisingly strong' reaction to Windy City deal

JPMorgan Cazenove downgraded Diploma to ‘neutral from ‘overweight’ on Wednesday following "a surprisingly strong" share price reaction to the Windy City Wires acquisition.

The bank said that while the acquisition is appealing, the share price is now 28% higher, versus earnings per share accretion of 13%.

"We are also conscious of the impact of lower return on capital employed M&A on the group’s earnings growth potential," it said, adding that it has made no changes to its forecasts.

Diploma announced last month that it had agreed to buy US-based wire and cable distributor Windy City Wires for £357m.