JPM downgrades Diploma after 'surprisingly strong' reaction to Windy City deal
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-92.00p
JPMorgan Cazenove downgraded Diploma to ‘neutral from ‘overweight’ on Wednesday following "a surprisingly strong" share price reaction to the Windy City Wires acquisition.
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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.