Saga’s FY26 YE update confirms trading ahead of expectations, with a simpler and more stable platform translating into more predictable delivery. We upgrade our FY26-FY28 forecasts, increasing underlying PBT by +16% in FY26 and by +19% and +9% in FY27 and FY28 respectively, driven by strong Travel execution and Insurance outperforming in a transitional year. Strong forward booking metrics, particularly in Ocean Cruise, provide clear visibility into FY27 revenue and materially de-risk our outer-year forecasts. We raise our 12-month target price to 615p (from 515p). Despite a threefold share price increase since our June’25 initiation, Saga continues to trade on undemanding Jan’27 multiples of 12x P/E, 7.5x EV/EBITDA and a 9% FCF yield. With earnings growth and deleveraging progressing in tandem, we see a clear path to leverage below 2x by FY30 and delivery of at least £100m underlying PBT, reinforcing our high-conviction Buy and positioning Saga as increasingly relevant for mid-cap investors spanning momentum and deep-value strategies, as execution replaces legacy perceptions.
