Daily Stock Market Report (Thur 17th September 2026) - BILN, SUP, TBTG, DRX, BYIT, DEBS, VCT

Federal Reserve: as expected, the Fed raised rates to 3.75-4% yesterday, and as expected, President Trump expressed his dissatisfaction (writing “LOWER THE INTEREST RATES” on social media!).

Fed Chair Kevin Warsh said "We removed a dose of accommodation so that financial and credit conditions would be more consistent with our ultimate objectives," and most Fed officials seems to support another rate hike before the end of 2026.

The US 10-year bond yield continues to hover around 5%, which is a long-term high, as the Fed works to gain credibility on the subject of inflation.

UK inflation/BoE: the UK’s headline inflation rate increased to 3.1% in August, but the “core” rate was unchanged at 2.6%. Both readings were in line with consensus. The Bank of England is expected to keep rates steady today at 3.75%, with uncertainty around whether or not a rate hike will be seen this year. There will be plenty of commentary from the BOE to digest later this afternoon.

Overnight market movements:

• The FTSE is up 0.2% at 10,715

• S&P 500 is up 0.6% at 7,595

• Brent crude (November) is down 1% at $104.75/bbl

• Gold is up 1% at $4,305/oz

• Bitcoin is up 0.25% at $76,350

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We are done for today, thank you. Spreadsheet accompanying this report: link.

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Companies Reporting

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Graham's Section

Beauty Tech (LON:TBTG)

Up 13% at 395p (£437m) - Interim Results & Intention to launch share buyback programme - Graham - AMBER/GREEN ↑

This is a recent listing, having joined the main market less than a year ago.

I initially looked at it when it IPO’d and then again in April.

I’ve been cautiously neutral on it, but its share price has been really strong. It’s up 44% compared to its IPO price:

These interim results are sparkling:

Actual PBT (£17.5m) is even higher than adjusted PBT (£15.3m).

Let’s remind ourselves of what they do:

• Currentbody: LED light therapy face masks (reducing lines and wrinkles, hair growth, changing skin tones)

• ZIIP Beauty: hand-held electronic devices for the face.

• Tria Laser: hair removal.

During H1, Currentbody completed development of its latest range, and these are launching in H2. This is the most important division in the group, responsible for £71m of revenues in H1 (about 90% of the total).

In other news, the company is opening its own lab in early 2027. It’s also working to set up its own European warehouse.

Outlook:

The Board remains confident in delivering full-year revenue in line with the upgraded guidance announced on 7 July 2026 of no less than £170.0m. However, with the strong Adjusted EBITDA margin expansion in H1 FY2026 and increasing confidence in delivering on a typically stronger margin profile in the second half of the year, the Board now anticipates Adjusted EBITDA for the full year to be ahead of its prior guidance, and to be no less than £48.5m

The guidance given by the company in July was for adjusted EBITDA of no less than £45m, which itself was an upgrade on market expectations of £41.5m.

So that makes for a total upgrade of 17% on original expectations, with the upgrade today being c. 8%.

It’s interesting that today’s upgrade does not include a revenue upgrade. I have no problem with that personally: revenue growth is already very strong and if profitability on existing revenues has improved, that only makes for a higher-quality business.

Dividend/buybacks

There’s a very healthy net cash balance of £52m, which leads to some capital allocation questions.

The company is answering these questions with a £20m buyback and no dividends.

Their rationale is simple enough: they have “a robust balance sheet with a substantial cash balance and resilient free cash generation”, and are “committed to maintaining balance sheet efficiency and delivering optimal returns for shareholders”.

They don’t make any particular argument as to why their shares are attractively priced. So it’s up to us to decide if we think this makes sense.

The P/E multiple as of last night:

Estimates: Cavendish left their forecasts unchanged in today’s morning note, waiting for the analyst meeting before upgrading. If I naively increased their FY26 EPS forecast by the same percentage as the EBITDA forecast increased, I would get a new EPS forecast of 28.6p.

I would therefore get a P/E multiple of slightly less than 14x at the current share price.

Is that good value for a buyback? I can see why it might be, for a successful, growing business.

Graham’s view

My IPO rule is that newly-listed stocks should be treated cautiously for about two years, and we should presume that they are overvalued at the time of their IPO.

TBTG is breaking the rules with a high-quality financial performance and with earnings upgrades that help make a case that if anything, their stock is undervalued rather than overvalued.

Management’s decision to go down the route of buybacks rather than dividends is also a strong statement that they believe in their own undervaluation.

As for quality, Stockopedia calculated a ROCE of 22% for last year’s performance. TBTG’s more generous calculation of “operating ROCE” says that they’ve improved from 58% last year to 65% in H1.

Whichever source you use, it’s a high-quality performance.

I could go fully GREEN on this today but I’d prefer to gradually warm up to the story, so I’ll increase our stance by one notch only. But there’s something very interesting happening here and for investors who are comfortable looking at new ideas rather than sticking to well-known names, this looks like a great candidate for more detailed research.

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Boohoo (LON:DEBS)

Up 1% at 24.8p (£382m) - Trading update for the six months ended 31 August - Graham - AMBER/GREEN ↑

Does anybody else find it amusing that this company is still legally boohoo group plc? Debenhams Group is merely their trading name: they couldn’t change their legal name due to the objections of Mike Ashley/Frasers.

Mike Ashley can't be too upset with these numbers. H1 FY27 is the six months to August 2026:

Note that exceptional costs have dropped dramatically, from £24m to only £4m, so “reported EBITDA” is very clean at £20m, only modestly lower than the adjusted figure. And much better than the EBITDA loss that was reported in H1 last year.

Growth was broad-based and accelerated during the course of H1:

GMV grew 1.8% year on year, with growth of 0.5% in the first quarter (“Q1”) accelerating to 2.9% in the second quarter (“Q2”). Performance was most notable across the Debenhams brand, where GMV grew 14.1% to represent c.41% of Group GMV. Pretty Little Thing, boohoo and Karen Millen have all returned to growth.

Two key clothing ecommerce metrics have improved: gross margin and returns.

Gross margin has shifted from 51.9% to 53.9%, while returns are down by c. 4%.

I don’t think it’s a stretch to say that these two metrics, more than any others, are the foundation of a successful online clothing business. So this improvement is highly significant, in my view.

Capex fell from £8m to £5m, which bodes well for free cash flow.

Net debt ended the period at £102m but there’s been really good news on that front in the past month: they are leaving their Sheffield distribution centre and selling all of the equipment in it, receiving a total of £90m by early next year (in fact most of the cash has already been received). The change in business model will see them using a 3rd-party logistics provider instead of operating a large distribution centre themselves.

They’ve also sold Nasty Gal for USD $16m.

Outlook: in line. Adjusted EBITDA for the year of “no less than £59m”. This implies a big performance in H2, with nearly 60% of adjusted EBITDA due in the second half.

Graham’s view

Debt is no longer a real concern and I think that recognising this means taking our stance up to a more positive level.

Roland was neutral in June which itself was an upgrade on our previous perspective.

Today I’m turning AMBER/GREEN.

When it comes to selling cheap clothing to young people, I’m still not sure if it’s possible to compete with even cheaper alternatives (i.e. Shein).

But Debenhams/boohoo are putting their best foot forward. The transition to an “asset-light” business model, emphasising the company as a “marketplace” for other brands, is an enormous change that seems to be already improving performance.

And they are now much better diversified than they were when boohoo/PLT were the main brands.

Finally, I think the UK is going to get involved, like the EU has already done, in assisting domestic companies by implementing measures against cheap Chinese competitors. Things might get more complicated for Shein, starting in 2028.

So I think there are enough positives here for us to be mildly positive at this stage. The elimination of the vast majority of net debt is the single biggest change since the last time I looked at this one. Let’s see how much of this £59m of EBITDA they can convert into real profits and cash flow.

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Mark's Section

Billington Holdings (LON:BILN)

Up 8% at 439p (£54.3m) - Contract Wins - Mark (I hold) - AMBER/GREEN =

It is often said that in the US Gold Rush the providers of picks and shovels did best. Some individual prospectors will have struck it rich. But the suppliers of picks, shovels, and general provisions were among the most reliable and consistent beneficiaries of the gold rushes. Notable examples include Samuel Brannan, who became a millionaire by buying up mining equipment and selling it to prospectors at a massive markup. Or Levi Strauss, who started by selling rugged tent canvas and later moved into heavy-duty riveted denim for miners.

In the current AI boom, chip manufacturers have been the most obvious picks and shovel play. While the Microsoft share price is down 16% over the last year, DRAM manufacturer Micron Technology is up 410%.

The spend of the “hyperscalers” in the race for AI gold shows no sign of slowing, and the benefits are being seen in “picks and shovels” further down the supply chain. It is demand from AI-led data centres and related infrastructure that has been behind Somero’s recent recovery. Today, Billington announced that they are seeing the benefits too:

…two further significant contract wins for data centre projects with an expected combined value of circa £42 million.

When the company announced a data centre win in April, they flagged the potential for further wins in this space. The first project is planned for completion in FY27, the second will continue into FY28, so revenue will likely be recognised in those years.

Broker Forecasts:

As with July’s announcement of £28m of non-data centre contracts, Cavendish consider these to be in their existing forecasts, saying:

We maintain our forecasts pending the forthcoming Interim results scheduled for 29 September 2026.

However, the normally conservative management flag that these contracts “add significantly to our now record order book and provide excellent visibility through 2027 and into 2028”. It is possible that this is similar to the listed government IT providers where multiple contract wins were said to “underpin forecasts” before an inevitable upgrade arrived.

Valuation:

Even if there is no upgrade to FY27 numbers in the short-term, Cavendish points out:

The shares trade on an attractive FY27E P/E of 7.9x and an EV/EBITDA of 2.1x (with net cash representing c.48% of its market cap).

These metrics look too low to me for a well-run, conservative business with a record order book, so I hold the shares. However, I note that the real standout metrics are the EV ones, due to the large cash balance. So far, the management seems reluctant to put this cash to use. Perhaps that conservatism is working against them, as they describe the cash as a buffer in challenging times. I also wonder whether the recent closure of their Yate facility means they don’t want to be seen taking big corporate actions or returning capital to shareholders in the short term. Whatever the reasons, I think the cash balance has now gone beyond a sensible buffer, and they need to “use it or lose it”.

So far the shares have risen about 8% on this news, which seems a lot for what is so far an in-line update. However, given the valuation metrics are more aligned with the market expecting a miss on FY27 numbers, anything that builds confidence that they are in line is positive.

Stock Ranks:

The company has a strong but not outstanding StockRank:

The Value ank reflects the weak FY25 numbers. Assuming there is no material warning for FY26, I expect the Ranks will jump back to Super Stock status with future results. Quant investors may want to wait for confirmation of that jump, at the risk of paying a higher price.

Mark’s view

These wins reinforce my view that this stock looks too cheap for a conservatively run company with a strong full-cycle ROE and a record order book.

That said, it is a cyclical industry and last year’s results show what happens when market conditions conspire against them. I would also prefer they do something with their excess cash in the short term or return it to shareholders.

Overall, I am happy to keep Roland’s previous AMBER/GREEN view.

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Supreme (LON:SUP)

Down 2% at 138p (£165m) - AGM Trading Statement - Mark - AMBER ↓

This is an in-line AGM update, and they helpfully give us the past and forecast EBITDA figures. However, what stands out is that these aren’t really going anywhere:

• FY25: £40.5m
• FY26: £40.6m
• FY27: £39.6m

In line is slightly below where they have been in the past. This is despite the acquisition of a number of consumer brands or businesses in the past couple of years.

Looking at the last set of results, the challenge is clear. 55% of revenue and 60% of gross profit came from vaping:

This is an area that is facing increasing regulatory and tax burden. They address this in today’s update:

The Group remains well positioned to deliver organic growth and resilience in the vaping market and is fully prepared for the introduction of Vaping Products Duty on 1 October 2026. The new duty will be charged at 22 pence per millilitre across all vaping liquids. This means a 10ml bottle will attract £2.20 of duty, while a two-pack of 2ml pods will attract 88 pence, before the impact of VAT. Supreme supports the Government’s objectives of creating a more regulated and compliant vaping market.

Including VAT, the shelf price increase for a 10ml bottle is £2.64. A quick Google AI summary suggests the current average 88Vape price is around £1.20 for 10ml “Nic Shot”. The new price will be £3.84, more than 3 times the price. A 50ml “short fill” will more than 4x going from £4 to around £17.

There is a grace period for existing stock until 31st March, and users may well have pulled ahead demand into the current period, which may delay the financial impact into FY28. The company may be relatively sanguine about this change, and it may see some benefits if there is a crack down on unregulated vapes. However, I struggle to see that a 3-4x price increase for their most profitable products isn’t going to have an impact on consumer demand.

Obviously the company has the benefit that their core product is addictive. However, I think it is too soon to conclude that these changes won’t have a material impact on the business. It seems that the brokers may have been starting to anticipate the impact too:

This still implies a forward P/E of around 7, which is low for a company with no real debt and a 20%+RoE. However, if the big price increases on vaping fluids do have an impact on demand, then this EPS figure would surely shift to a much lower level, given the company’s high exposure to this product.

Mark’s view

When Roland last reviewed this he kept our previous mostly positive view. However, at the time this was backed up by a high and rising StockRank. Today, the recent broker downgrades and associated share price reaction have taken their toll on the Ranks:

It may seem strange to reduce our view on an in line statement for a company trading on a forward P/E of 7. However, at this stage we just don’t know what a 4x price increase on their key products is going to do to consumer demand. In light of this, I think we should take a more cautious stance of AMBER, at least until it is clear the vaping duty hasn’t severely impacted the company’s profitability.

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Drax (LON:DRX)

Flat at 825p (£2.76bn) - Trading Update - Mark - AMBER ↑

Drax reports “Full year 2026 expectations for Adj. EBITDA around top of range of consensus estimates.” However, the market has shrugged its shoulders. This may be because the guidance range is pretty tight at £698 consensus, with a range of £680 – £711 million, so this is at best a 1.9% upgrade. It also seems to have been expected, with the share price reacting positively to the demand for energy, and increased prices over the summer:

While FY26 has seen upgrades recently, FY27 has been going the other way:

This means a forward P/E of 10 looks like a more challenging 15 for the year after. This may simply reflect more conservative energy pricing assumptions going forward, which may or may not come to pass. However, I think another factor is at play.

Subsidies, subsidies, subsidies:

Drax operates the UK's largest power station in North Yorkshire with 2.6 GW of capacity, having converted four of its six former coal units to biomass, making it the world's largest decarbonised power station. That plant alone still contributes around 6% of the UK's total electricity supply, burning almost entirely imported wood pellets.

Drax has relied heavily on government subsidies of around £700m a year. That's meaningful next to EBITDA that was £1.2bn last year and around £700m forecast for this year, making Drax highly exposed to whatever the subsidy regime does next.

That regimedeliberately is now being wound down deliberately. The UK government and Drax agreed a deal halving subsidies from 2027 to 2031, in exchange for a commitment to source all woody biomass sustainably.

Wood pellets as a sustainable fuel have been controversial, with many pointing out that cutting down forests and shipping the wood to the UK to burn may not be considered sustainable. However, the FCA investigation into Drax's sustainability claims around Canadian biomass closed in June 2026 with no further action taken.

Under that new arrangement, generation is expected to fall by around 55%, taking Drax's share of UK electricity supply down to about 1.8% by 2030, and subsidy costs down to roughly £1.2m a day from about £2m a day currently.

In this environment, it is unsurprising that Drax has been focussing on diversification. In July, Drax completed its acquisition of Bluefield Solar Income Fund, adding 0.9GW of operating and under-construction solar and wind assets plus a 2.9GW development pipeline. This made its combined renewable and flexible generation capacity above the 2.6GW of the Drax Power Station for the first time.

The trend is away from biomass that is only really economic due to subsidies, to true renewables:

The regulatory risk may have gone away in the short term. However, I think the result is a less profitable medium-term outlook.

StockRanks:

The StockRanks rate this as a SuperStock:

However, I am a bit cautious about this. Declining forward profitability from reduced subsidies will cause the Value Rank to decline going forward. This will also be reflected in lower Quality and Momentum Ranks.

Forecasts:

The only research I can see from Longspur suggests FY27 will be a low point, with EPS growing in FY28 and FY29 as solar projects come on stream. FY29 EPS is still forecast to be some 35% below the FY25 numbers, though.

There’s a 4% dividend yield, but I struggle to get excited by this. Especially as there was £ 1 bn of net debt at 30th June, prior to the debt-funded acquisition of Blue Solar for £561m, with an enterprise value of £1,082m. Overall indebtedness is likely to be over £2bn, which looks a little punchy compared to their £700m EBITDA. Longspur forecasts this to come down to 2.5x EBITDA by the year end.

Mark’s view

While FY26 looks reasonable, declining profitability in FY27 makes the company look more expensive on a forward-looking basis. There is possible upside from the recently acquired wind and solar generation, particularly if UK energy prices remain elevated. There is also some optionality from the ability to co-locate data centres at the Drax power station.

However, this is offset by the risk of further reductions in biomass subsidies, on which they remain highly dependent. Plus, they are now at the limit of what investors would want to see in terms of leverage.

We’ve not reviewed this on the DSMR for a while. Graham had this as AMBER/RED when the news of the FCA investigation broke. While this ultimately passed without action, the reduction in subsidies is going to impact profitability going forward, so a neutral view seems about right. AMBER

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Bytes Technology (LON:BYIT)

Up 12% at 452p (£925m) - Half Year Trading Update - Mark - AMBER/RED =

The market has liked this update from what is described as "one of the UK and Ireland's leading software, security, AI and cloud services specialists”:

The Group has traded ahead of expectations in the first half of FY27, continuing the momentum built from H2 FY26. Gross Invoiced Income for the period is estimated to increase by c.19% year-on-year, with Gross Profit estimated to increase by c.18% and Operating Profit by c.6%. The Operating Profit performance reflects the impact of cost normalisation previously communicated. This reflected higher technology costs linked to strategic projects and a return to more normalised bonus levels.

This is said to be ahead of expectations, but I’m a little underwhelmed myself. H1 operating profit is up only 6%. And the guidance is for the full-year operating profit to be slightly below this rate of growth:

As a result of the strong first half performance, the Board now expects Gross Profit growth for the full year in the low to mid-teens, with low to mid single-digit Operating Profit growth.

I can’t see any broker notes on Research Tree to give a direct comparison, but this compares to an EPS growth forecast of 5% in the Stock Report:

It seems that any beat is relatively slight, and I honestly would have expected any business operating in the IT security space to be doing far better than this.

The rating looks very high for such pedestrian growth rates, with a PEG of 2.4:

The share price is up year-to-date, despite a consensus that looks to be still below where it started the year:

In comparison, Computacenter reported H1 adj. PBT that was double the previous year and is on a similar forward multiple. At the smaller end, Shearwater expects adj. EBITDA up 40% and is on half the multiple here.

On the plus side, the company has a decent cash balance:

BTG's net cash position at the end of H1 FY27 was c.£68m, after returning £41.3m to shareholders through the payment of the FY26 final dividend of £16.3m and £25.0m of share repurchases under the Group's buyback programme. Cash conversion for the first half was around 45% (H1 FY26: 34%), reflecting the Group's normal weighting towards the second half of the financial year.

However, this isn’t enough to shift the valuation multiple significantly. I also have to question their commitment to a share buyback. On the current forward multiple, this looks more like poor capital allocation rather than shareholder returns.

Mark’s view

Roland rated this as AMBER/RED following their FY profits warning in March. I don’t think a slight upgrade for the current year changes should change that view when the stock has a high PEG ratio and a trading performance that looks well behind sector peers.