2nd May 2024 10:06
(Alliance News) - Spectris PLC offered little to investors sitting on "the sidelines" on Thursday, as it posted a weaker first-quarter.
Shares in the company fell 1.2% to 3,232.45 pence each in London on Thursday morning.
The supplier of high-tech instruments, test equipment and software for industrial applications said first-quarter sales were 8% lower on a like-for-like basis. Sales fell 13% on a reported basis to GBP309.4 million from GBP354.3 million a year prior.
Chief Executive Andrew Heath said: "While conditions in some of our end markets were softer than expected in the first quarter, notably China, we continue to expect to deliver progress this year as markets improve, with progress weighted towards the second half. As a higher quality, more resilient business, facing off to attractive markets, we are well placed to deliver continued organic growth, expand operating margins towards our target of 20%+ and compound growth through M&A."
Spectris predicts "another year of progress in 2024, including margin expansion". Its full-year outturn is expected to be second-half weighted, the firm said.
Spectris last month sealed the USD345 million sale of Red Lion Controls to HMS Networks.
Analysts at Jefferies commented: "Evidently, the slower start to the year, and no comment on 2Q24 [organic constant currency] sales guidance (management has previously pointed to a flattish/slightly lower 2Q in OCC terms) is unhelpful, but there is a firm expectation of improvement in 2H24, which is needed.
"We do not expect much change to consensus forecasts post this update. The group still has a lot to play for, in terms of improved through-the-cycle OCC growth, [earnings before interest, tax and amortisation] margin improvement potential, and a strong balance sheet to fund M&A. However, it remains all about execution, and there is no immediate catalyst in this morning's update to get potential investors off the sidelines in the near term. The medium/long-term outlook remain attractive."
Jefferies rates Spectris at 'buy'. Shore Capital Markets is less keen on the stock, rating it at 'sell'.
"We now see no clear catalyst that could drive a share price outperformance and we see the shares as being relatively expensive," Shore analysts commented.
By Eric Cunha, Alliance News news editor
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