JPM Europe Equity Research | Today’s Morning Meeting

Europe First to Market 21 August 2026

Today’s Morning Meeting | Also Published Today | Key Changes | JPM Events | Upcoming Earnings

Today’s Morning Meeting European Sporting Goods (Wendy Liu)

Q2 Wrap - a tough quarter but too early to call a structural slowdown

Q2 has been a tough reporting season for the European Sporting Goods companies. Limited guidance upgrades (and a few downgrades) have weighed on the sector, with adidas -12%, On -20%, Puma -5% and JD Sports -14% on their results days. Growth is slowing as brands prioritise full-price DTC sales in a highly promotional market. On the other hand, a DTC-led growth model comes with a cost, especially as brands stepped up marketing and activations to drive online and store traffic. Our discussions with investors so far clearly indicate concerns about a structural slowdown in sector profit growth. While we do not expect market conditions to improve materially over the next two quarters, there is limited evidence to conclude that there is a structural slowdown in footwear demand. Meanwhile, JD Sports’ update yesterday suggests that inventory remains controlled and both brands and retailers look disciplined on supply. We see scope for wholesale order growth to re-accelerate into Q4-26 and 2027 as newness builds (notably at adidas and On), and upcoming CMDs should remind investors that newness pipelines remain solid into the new year. Meanwhile, expectations have reset into Q3 following recent results. We remain OW on adidas and On.

Drax (Pavan Mahbubani, CFA) (DRX LN, OW)

Branching Out - Resume full coverage with an Overweight Rating

We resume full coverage on Drax with an OW rating following a period of restriction, with our 960p Dec-27 PT implying 33% upside potential. The company has been utilising its balance sheet capacity to invest in new assets and businesses - we estimate that ~80% of group EBITDA between 2022 and 2025 came from a combination of Drax Power Station and Pellet Production, which reduces to ~40% over the period 2026-2031 as contributions increase from assets including hydro, gas plants, battery storage, and recently acquired solar and wind assets. We see Drax as well-positioned to create value as the UK power generation mix becomes more volatile, with the share of baseload nuclear and biomass in the UK mix gradually declining. Our 2029 EBITDA estimate is consistent with the lower end of the company’s £650-£800m guidance (excluding Devex and the BSIF acquisition) and we see this as a conservative starting point with upside risk should Drax Power Station and other flexible generation assets do better than we model. We expect Drax to publish a trading update in September, updating guidance to include the contribution of BSIF for 2026. We would also expect an investor day in the coming months with an update on capital allocation priorities and refreshed medium term targets.

EMEA Equity Research AC Europe Equity Research ( August 2026 JPMORGAN

Company Research CTS Eventim (Lara Simpson) (EVD GR, OW)

Momentum intact with an in-line Q226 - guidance unchanged with Milan CMD set for November 20th

Evonik (Chetan Udeshi, CFA) (EVK GR, UW)

Model update: Methionine feeds near-term upgrades but unlikely to sustain into 2027; Remain UW

FLSmidth (Chitrita C Sinha) (FLS DC, OW)

Q2’26 Wrap-up: Solid Results and Well Situated to Benefit from a Copper Capex Pick-up. Remain OW

Holmen (Detlef Winckelmann) (HOLMB SS, UW)

Q2’26 review: Refining estimates post a strong Q2

PPHE Hotel Group (Estelle Weingrod) (PPH LN, N)

Reinstating coverage with a N-rating; PT to 1,750p (~12% upside)

| Rockwool (Zaim Beekawa) (ROCKB DC, N)

Downgrading to Neutral as higher capex weighs further on FCF profile with sourcing constraints limiting margin progression

Sector Research Gaming (Estelle Weingrod)

New York Weekly (ending 16 Aug): OSB handle down 17% y/y, GGR up 34%, hold rate 11.7%

#203 - Revisiting insurer interest rate sensitivity

Strategy, Macro, Economics & Sustainable Investing Research Flows & Liquidity (Nikolaos Panigirtzoglou)