17th Aug 2015 13:13
LONDON (Alliance News) - Investec keeps its Buy rating on Spectris, although it lowers its price target for the stock, saying it sees "upside in the shares on news of even a modest improvement in growth."
Invested has reduced its target price for Spectris to 2,240 pence from 2,800p. Shares in the company are trading down 0.1% at 1,906.00 pence Monday afternoon.
The stock is "in the doldrums" after warning in July its operating profit will be at the low end of market expectations for its full year 2015, hit by a challenging trading environment and cost reduction measures.
The company is "short on underlying growth and with costs being cut to avoid further downside in margins", Investec says. However, Investec believes the interim results painted a picture that was "also influenced by transient issues that should normalise".
"Meanwhile, Spectris is generating cash to finance acquisitions and/or special distributions," Investec says. It expects a combination of the unwinding of one-off factors and new product launches to underpin a gradual improvement in growth in 2016 and 2017 earnings.
Investec has cut its earnings per share forecasts by around 8% to 9%, leaving them around 2% below the company's implied guidance and around 5% below consensus for 2015 earnings.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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