13th May 2015 10:53
LONDON (Alliance News) - N+1 Singer reiterates its Sell rating on Renishaw despite the FTSE 250 engineering company saying its revenue and pretax profit surged higher in the third quarter and the first nine months of the year driven by its operations in the Far East.
The broker keeps its price target at 2,085 pence. Shares trade up 2.5% at 2,571.67p.
The group said revenue in the third quarter to the end of March was GBP145.9 million, up from GBP84.5 million a year earlier, driving its third quarter pretax profit up to GBP53.2 million from GBP14.4 million and its nine-month pretax profit up to GBP109.8 million from GBP40 million.
N+1 says Renishaw's positive results reflect the impact of large orders related to the manufacture of new Apple products and does not expect these order to reoccur in 2016. The broker consequently forecasts a sharp decline in the company's sales and pretax profit then.
The broker believes the stock is expensively valued after the positive impact of Renishaw's strong 2015 and forward momentum dissipates.
"In our view, the group?s rating looks too rich once the impact of 2015 drops out, and news flow and momentum appear to be more negative, hence our Sell recommendation," says analyst Jo Reedman.
By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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