Daily Stock Market Report (Thur 9th July 2026) - PEBB, HSW, CPI, CCC, POLR

It turned out to be a rough day for the FTSE yesterday, down 1.7%, as markets were rattled by Trump’s declaration that the agreement to end the war was “over”.

Last night saw another 90 Iranian military targets hit.

If things escalate from here, it may involve the United States taking over Kharg Island, a strategically vital piece of land that’s just five miles long and three miles wide. It supposedly handles 90% of Iran’s oil exports.

Last night, the influential Larry Kudlow said on Fox:

Talking to military analysts, I have come to the view that the next big step in the Iranian war should be an American takeover of Kharg Island. That would completely cripple what’s left of Iran’s already decimated economy.

For those of us who were hoping for a quick peace deal, it sounds like things might be about to get worse, before they get better.

6.30am update: Trump says that Iran "called a little while ago. They want to make a deal so badly."  Sounds promising, but Brent Crude is still up $6 this week - something more concrete than this will be needed to calm nerves.

Overnight market movements:

• The FTSE is up 0.4% at 10,500

• S&P 500 is up 0.3% at 7,505

• Brent crude (September) is down 0.3% at $77.70/bbl

• Gold is up 0.4% at $4,090/oz

• Bitcoin is up 0.8% at $62,650

Companies Reporting

Graham's Section

Hostelworld (LON:HSW)

Down 3.5% at 106.2p (£132m) - Trading Statement - Graham - GREEN =

(At the time of writing, Graham has a long position in HSW.)

The headline from this online travel agent is:

FY 2026 guidance reiterated, strong revenue momentum sustained through H1 2026

Here’s an overview of H1:

• Net revenue +12% year-on-year to €52.2m (despite a volume reduction estimated at 3% from the conflict in the Middle East).

• Commission rate improved to 17.7% (H1 last year: 15.8%) thanks to Elevate (hostels paying for additional visibility).

• Adj. EBITDA +11% year-on-year to €8.2m.

Net cash finished H1 at €2.5m (as of December 2025, there was net debt of €1.6m).

Acquisition: the purchase of OccasionGenius will soon bear fruit with event calendars going up for travellers in Q3 2026.

A key financial metric - direct marketing costs as a percentage of revenue - reduced from 51% in H1 last year to 49% in H1 2026.

CEO comment:

We continued to make good progress against our strategic roadmap during the first half of 2026. Our third-party budget accommodation offering is expanding across platforms and languages, event discovery is due to go-live in Q3 across the platform, following our acquisition of OccasionGenius, and Social Passes are broadening our addressable market…

…Our full-year guidance assumes that the disruption associated with the Middle East conflict eases through the second half and broader trading conditions normalise, with the contribution from our growth initiatives increasing as the year progresses. The Group continues to monitor the ongoing geopolitical environment but on the basis of the above, we reiterate our guidance for the full year."

Given the disruption in the Middle East in over the past 24 hours, which inhibits travel to Asia and Oceania, it makes sense that the Hostelworld share price might dip by a few percentage points today. The outlook statement above is pretty clear: hitting full-year guidance will require this problem to go away.

Graham’s view

I’m a shareholder here, and I’ve been GREEN on it, as I think it’s far too cheap for what it is.

In my view, a successful online platform, with majority market share in its niche, and that benefits from network effects, is worthy of a premium rating.

It does not currently enjoy that:

If it hits City forecasts this year (that is a big IF), then adjusted EPS will be heading for 14 cents, then 17 cents in 2027. The share price equates to about 125 cents.

With six months left in the year, there is every chance of a minor profit warning if Middle East disruption continues. But the range of possible outcomes surely cannot be all that wide, given that so many 2026 travellers will have already travelled or made their bookings by now?

Another question worth asking is whether we can trust the adjusted EPS figures. I do think they are inflated slightly by SBPs (share-based payments), but not egregiously so. SBPs were €1.8m in 2024 and €1.5m in 2025, while total adjusted profits were €17.4m and €15m, respectively.

Overall, therefore, I’m inclined to stay GREEN on this today.

There are some decent arguments for downgrading our stance. The share price reaction this morning suggests that there is some doubt around the company’s ability to hit forecasts this year. The outlook statement itself says that their assumption is that conditions will normalise. So if conditions don’t normalise, we can expect a profit warning here.

But from my point of view, this is already priced in. An adjusted P/E multiple of 8x for a company like this says it all. That’s a pessimistic rating and so I remain positive on the risk/reward that this offers.

In closing, I'd like to note that Stockopedia no longer rates this as a Sucker Stock, as it did the last time I looked at it in March. The StockRank is only 26, but the category has improved to Neutral. Perhaps the computers will slowly come to agree with me on this one!

Polar Capital Holdings (LON:POLR)

Down 3% at 888p (£899m) - AUM Update - Graham - GREEN =

At the full-year results last week, we were already told that Polar’s AUM had spiked to £44.7 billion..

Today’s AUM update lets us know the official figure for Q1 (June 2026), which is £44,993m.

We also knew that there had been £2.3bn of net inflows since year-end.

The official figure for Q1 is £2,460m.

While the positive flows are both impressive and very welcome, they are overshadowed by the enormous c. £12bn surge in assets values flowing from market movements and fund performance:

CEO comment:

Strong absolute and relative performance from our Technology, Artificial Intelligence and Smart Energy strategies was a key contributor, supported by high-conviction thematic positioning.

Client demand was led by our Technology and AI funds, with positive contributions from Healthcare, Smart Energy, Global Absolute Return and Japan Value. Net outflows were primarily from Emerging Markets Stars and Global Insurance, with redemptions remaining largely client specific.

Graham's view

As I noted at the full-year results, the boom in the Technology sector has resulted in a very high concentration of Polar’s AUM in that sector. Technology accounted for 55% of Polar’s AUM at the end of March, up from 42% a year earlier, and it’s probably much higher now. So that's the main risk exposure: a change in sentiment in Tech.

I don’t see any new earnings forecasts today, so I can only refer you to the one I saw last time: EPS of 97.7p in FY March 2027.

The shares are still not very expensive in P/E terms, and the StockRank is 96:

So while I acknowledge the Tech concentration, there is no need to change my stance here.

I note that the share price is off 3% today, and 8% over the past week.

This is on the back of a very strong run up in recent months - so I’ll interpret it as some ordinary profit-taking (i.e. “sell the news”). Correction: today's fall can largely be explained by going ex-dividend. Thank you to the reader who pointed this out!

The rally has been driven by real earnings upgrades:

My overall view is unchanged: this fund manager is best-in-class.

Mark's Section

Pebble (LON:PEBB)

Down 1% at 58p (£82.8m) - HY Trading Update - Mark - AMBER/GREEN

I recently wrote a StockPitch article on this company, so I won’t provide much background today. It came to my attention when it appeared on a screen that I created to look for companies that are forecast to grow despite weak economic conditions, and looked like good value. Pebble (LON:PEBB) continues to feature on that screen despite the share price rising since I wrote the article.

Importantly, they continue to grow:

We expect to report a positive trading performance for HY 26 with Group revenue ahead of the prior year. HY 26 Adjusted EBITDA is also expected to be ahead of HY 25, reflecting the impact of revenue growth and the continued investment to support scaling at Facilisgroup.

However, this line is a little vague, so I am pleased they added some more detail:

• Facilsgroup: revenue +7%. “...our approach to long-term partnerships has supported the constructive evolution of the pricing structure for our enhanced technology.” Sounds like they can increase prices by adding desirable features, which is a good place to be.

• Brand Addition: revenue +4%. “...driven primarily by incremental revenue from new contract wins secured over the last year.”

These don’t look particularly strong revenue growth rates. However, they are ahead of the 2.4% revenue growth that is forecast by brokers. And there are signs that this is not just a one-off. For Facilsgroup, they suggest that their pricing strategy “will positively impact revenue growth from H2 26 onwards and significantly extends our committed revenues by entry into multi-year contracts.”

Profitability:

So, although this is an in-line update, I view this positively. There is a strong H2 weighting to EPS, so I can see why they may want to remain cautious:

FY26 EPS is predicted to bounce back from a slightly weaker FY25, with the real growth in FY27. History is a little bit patchy, though, with periods of growth being followed by times of retracement:

In March, Panmure Liberum cut FY26 EPS but increased FY27:

This was due to the company flagging increased investment in Facilisgroup to drive higher growth. I am naturally sceptical of these sorts of moves as they often leave scope for brokers to simply do the same next year if targets are not met. Also, my experience tells me that markets hate any short-term hit to EPS forecasts, even if it's due to investment in higher long-term growth.

These kinds of moves often give great opportunities for investors willing to look through a short-term decline (if the higher growth does arrive), so it is key for me that the high-margin Facilsgroup is showing signs of that improving growth profile in H1.

Cashflow & Buybacks:

One of the attractions of the company is its continued strong cash flow generation:

The Group's balance sheet remains strong and its excellent free cash flow generation is supporting both organic growth and, as announced today, a £2.0m extension of the existing Share Buyback Programme.

The company continues to view their shares as good value, with an extended £2m buyback today. Some investors may take umbrage at these buybacks being described as shareholder returns:

In the 12 months to 30 June 2026, the Company returned £14.3m to shareholders (12 months to 30 June 2025: £6.0m). Following these distributions, net debt as at 30 June 2026 was £1.2m (net cash as at 30 June 2025: £6.0m). Assuming the full utilisation of the £2.0m extended Share Buyback Programme, net cash as at 31 December 2026 is expected to be approximately £5.0m (31 December 2025: £9.6m).

However, it is clear that if you believe that the shares are undervalued enough to hold, then the company buying back shares should add shareholder value.

Panmure Liberum keep forecasts essentially the same, saying:

We maintain our EBIT estimates, but increase FY 26 and FY 27 FD EPS by 1% and 3% due to the new buyback.

PL suggests the company will report modest net debt at the H1 end, but reaffirms the company’s view that it will return to net cash by year-end.

Valuation:

EBITDA isn’t a great measure for this sort of company as they capitalise intangibles. The £5m forenet cash is a nice buffer, but doesn’t significantly move the needle for a company with an £80m+ market cap, so price-earnings measures are going to be the best way to value this.

A forward P/E of 15 isn’t obviously great value. However, this falls to 11 for FY27. Panmure Liberum have a FY28 forecast of 6.3p EPS, taking the multiple down towards 9x, making them look better value. We have to take brokers' forecasts with a pinch of salt when they are that far out. However, it is worth noting that promotional products' performance is tied to corporate confidence, and better end-market conditions may turn current headwinds into tailwinds.

Strong cash generation means that they pay a dividend approaching 4% while buying back shares. This suggests that growth from here should be relatively capital light, and that the incremental returns on capital may be much better than the rather mediocre figures that the historical analysis suggests:

Mark’s view

While the forward P/E of 15 doesn’t scream great value, I think there are reasons to think that this company will grow revenue and EPS from here, at least in line with brokers' forecasts. This makes it look like a much better value for investors willing to take the long-term view.

Importantly, this trading update shows the key high-margin Facilsgroup leading the way, with H1 revenue growth ahead of FY revenue forecasts. There is still a strong H2-weighting, so I can see why management and brokers remain conservative. However, there are also signs that recent product investment is starting to show results, with customers willing to pay up for an increased feature set.

Strong cash generation, a reasonable dividend, and an ongoing buyback suggest investors may be relatively sanguine about the wait. Last time I looked at this company on the DSMR, I had a neutral view given the lack of previous coverage or a more detailed look at the prospects. However, my view has since been informed by writing a StockPitch article on the company. Despite a modest share price rise since my StockPitch article, I remain relatively positive about the company with an improved AMBER/GREEN view. Especially as it remains a SuperStock:

Capita (LON:CPI)

Down 17% at 232p (£m) - Trading and Civil Service Pension Scheme Contract Update - Mark - AMBER/RED =

That Capita were struggling with the Civil Service Pension Scheme contract was already known. On Tuesday they said:

Despite the progress made to date, we recognise the service has not been good enough, particularly for members waiting on bereavement, retirement and quotation cases and we are sorry for the distress and inconvenience experienced by those members. We now have the processes, automation and technology in place to work through the backlog…Capita is assessing the implications of the matters contained in the statement and, if required, will update the market as soon as it is able to do so.

This caused a 14% drop in the share price, but now it looks like an underreaction. Today, we find out that:

The issues with the Civil Service Pension Scheme contract and impact to the wider Pension Solutions divisions, post mitigating actions across the Group, are now expected to impact adjusted operating profit in 2026 by £25m – £40m with a £35m – £50m free cash flow impact, compared to our previous expectations.

I can’t see any updated broker coverage, but given that adjusted operating profit was around £114m in FY25, this is a 22-35% hit compared to historical numbers. Third-party reporting suggests that RBC cut their 2026 EBITA forecast by a whopping £40m to £64.8 million. RBC also reduced its 2027 EBITA forecast by £10 million to £127.9 million.

The problem:

The Cabinet Office officially awarded Capita the £239 million contract to administer the Civil Service Pension Scheme in November 2023. Following the contract award, Capita entered a two-year operational transition period before formally taking control of the scheme's administration in December 2025, replacing the previous provider, MyCSP.

This week, Paymaster General, Nick Thomas-Symonds, issued a highly critical update to parliament on Capita's handling of the Civil Service Pension Scheme, claiming that its systems were “overwhelmed” and the company was “completely unprepared” for taking it on.

It seems the government is withholding £9.9m of payments and seeking to recover the cost of deploying more than 140 Cabinet Office officials to help clear the backlog.

We have to be careful with political statements, as there can be an element of apportioning blame wherever it doesn’t fall on the government. However, there is no getting around that this is a damning public assessment of Capita’s capabilities by a key client.

With some government officials wanting to simply in-source the contract back into public administration, this will be an ongoing risk for the company.

Valuation impact:

Without being able to see the update notes from brokers, it is really hard to give a precise impact assessment. A simple calculation of a £40m pre-tax impact for FY26, with £30m post-tax, suggests EPS falls by 25p/share, perhaps a bit more due to the cash flow impact; with perhaps a £3-5m higher interest payment as a result? This looks to be at least a 50% cut in FY26 EPS.

At the moment, RBC estimates the FY27 impact to be much lower, at £10m EBITA, so maybe around 10p/share EPS reduction? So perhaps a 20% cut on consensus. The market appears to be looking through the FY26 impact and basing the reaction on the more modest drop in FY27. At this stage, there must be significant uncertainty about the eventual figure.

The bull case:

There has been an argument from holders here that this company is undergoing a significant re-invention. Selling off non-core businesses to reduce debt and focussing on key public sector contracts. For example, very smart investors Rockwood Strategic said this about Capita in their 2026 Annual Report:

Critical to our investment thesis, the company announced the exit of its loss-making legacy Life & Pension contracts and exited its Contact Centre activities during the year. This almost concludes the turnaround process which has stabilised the balance sheet, focused the business and transformed profitability. We expect a significant increase in free cash flow generation as the restructuring concludes in 2026 and 2027, justifying a large re-rating, the building blocks of which are now in place.

And they specifically highlight the ability for AI to transform public sector efficiency:

…in one investment, namely Capita Plc, we believe they are at the absolute forefront of the biggest AI efficiency opportunity in the country; the inefficiency of public sector services and should be a major beneficiary of adoption.

Rockwood may be right in the long term. However, this week's events highlight that transformational opportunities also carry significant operational delivery risks. A concept that investors need to keep in mind every time a company trumpets their use of AI in business processes.

Mark’s view

I’m pleased to say that Graham has been mostly negative here recently, highlighting that while there is evidence of business simplification and an improving balance sheet, there is still a long way to go on the turnaround. Backing this up is the Sucker Stock status, which is surely due to take a further dive once the algos have processed recent events.

That distance to eventual turnaround appears to have widened further today, so I keep our broadly negative view of AMBER/RED, as it is not clear whether this week’s price falls have sufficiently priced in the risk of a further deterioration in the company's relationship with its key client.

Computacenter (LON:CCC)

Up 6%at 4403p (£4.39bn) - Trading Statement - Mark - AMBER/GREEN =

Good news:

The Group delivered a further strong performance in the second quarter, ahead of our expectations, following an excellent first quarter. As a result, we now expect first half adjusted profit before tax to be approximately double the prior year's relatively soft comparative (H1 2025: £81.5m).

Leading to:

Looking to the full year, while we remain mindful of a tougher comparative in the second half of the year, we now expect to deliver full-year results comfortably ahead of market expectations.

Again, the market cap size means we don’t have access to the actual notes, and I can’t find any details from third-party sources. My instinct says that the 6% rise in share price will be low compared to the possible EPS upgrade, given the doubling of H1 PBT, even after adjusting for weak comparatives.

However, the valuation was already quite punchy for a software reseller, even one that offers many value-added services and handles the entire implementation. Even if we assume an upgrade to EPS higher than today’s share price, the algos are likely to still view this as expensive compared to the market and industry:

Sentiment shift:

What is most interesting to me is the shift in narrative. When Roland reviewed the same timed trading statement last year, the 2027 EPS going into the update was 210p and the share price was £22, making the 2027 P/E 10.5x. Since then, expectations have moderated before more recent upgrades kicked in:

Today, the 2027 EPS consensus is 214p, prior to any upgrades stemming from today’s FY26 beat, so this has not changed significantly, yet the 2027E P/E is now around 20.

What has really changed is the market sentiment regarding Computacenter’s relationship with AI. The company has experienced a massive shift from cautious scepticism to treating it as a big AI winner. Fears lingered even into early 2026 that an enterprise IT spending slowdown would deplete the company's order books. Instead, the order book has been increasing:

At 30 June 2026, our committed product order backlog was well ahead of the position at the end of 2025 (31 December 2025: £7.1bn), reflecting strong order intake during the half.

Given this, the rise in share price is not necessarily illogical, especially as they upgraded expectations today. However, it shows how much sentiment and outlook can move share prices in the short term, even in FTSE 100 companies.

Mark’s view

Given today’s upgrade and continued momentum, it makes sense to remain mostly positive at the moment. The scale of the increase in H1, even if it comes against soft comparatives, suggests there may be more to come. However, the rating has now almost doubled since Roland gave the company the thumbs up last year, and the Value Rank no longer provides any obvious downside protection should Momentum reverse:

So we will be vigilant for signs that recent trading strength may normalise or the order book weaken. However, with no sign of that on the horizon, I keep our mostly positive view of AMBER/GREEN.