24th Mar 2015 13:12
LONDON (Alliance News) - Though risks remain for inkjet printing technology company Xaar from the decline in demand from the ceramics manufacturing market, Investec peers through these headwinds and sees growth potential for the company from 2016 onwards.
Xaar's 2014 was broadly in line with expectations, Investec says, with the focus on the potential growth for new products and for direct-to-shape (DTS) primary labels.
The outlook for the DTS market was given a boost when Xaar revealed that one of its manufacturing customers has been using the technology to supply printing services to a Walmart bottle supplier for the last five years, a major step forward for the technology and news which goes some way to proving both its potential and the cost savings it can offer.
Though the first half of 2015 could result in further weak demand from ceramic tile manufacturers, Investec leaves its forecasts unchanged and steps up its rating on the stock to Add from Sell on increasing confidence that 2016 will see the start of a meaningful conversion of the primary labels market using the DTS technology.
The primary labels market is larger than ceramics and while the timing of this conversion is not certain, Investec sees the economics of the market as "compelling".
It hikes its target price on Xaar to 415 pence from 265 pence based on the optimism for 2016.
Shares in Xaar are up 4.8% to 408.69 pence early Tuesday afternoon, one of the best performers in the FTSE All-Share.
By Sam Unsted; [email protected]; @SamUAtAlliance
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