Portfolio

Berenberg raises target price on Halma following 'good' FY results

By Iain Gilbert

Date: Friday 14 Jun 2024

Berenberg raises target price on Halma following 'good' FY results

(Sharecast News) - Analysts at Berenberg hiked their target price on safety equipment business Halma from 2,295.0p to 2,450.0p on Friday following the group's full-year earnings report a day earlier.

Berenberg said Halma's FY24 results were "good", with a slight consensus beat on adjusted pre-tax profits, strong cash generation and good outlook commentary that it thinks underpins small consensus upgrades.

However, Berenberg said the ensuing 13% positive reaction in the share price which reflected said upgrades, as well as continued delivery from the Halma team and optimism regarding the firm's specific exposure to data communications technology trends, was somewhat of an "overreaction".

"While we do not doubt that the group is trading well heading into FY25, there is a risk that the market is pricing recurring growth of the level seen in H2 in the photonics business, which we expect will be difficult to maintain and will be balanced against other more-subdued parts of the portfolio," said the German bank, which reiterated its 'hold' rating on the stock.

"We make small upwards revisions to our forecasts to reflect the FY24 results beat and the slightly better-than-anticipated guidance. We upgrade our organic growth expectation to 6.6%, with 2.6% from M&A being offset by a 1.3% FX headwind - resulting in overall revenue growth of 8%, a 21% adjusted-EBIT margin and a c2% upgrade to FY25 EPS."











Reporting by Iain Gilbert at Sharecast.com

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