Analysts at Edison and Cavendish responded positively to discoverIE’s fourth-quarter and full-year trading update, with both houses highlighting a sharp acceleration in demand and arguing the electronics designer and manufacturer’s current valuation fails to reflect its improving growth trajectory.
The FTSE 250 company reported organic order growth of 15% year-on-year in the fourth quarter, a step-up from organic order growth in the third quarter, with orders running ahead of sales for the third consecutive quarter.
Organic revenue growth also improved to 5% in the fourth quarter. For the full year, the group order book was 6% higher than at the end of the first half.
Empfohlener Broker
Multi Asset Platform
Cavendish maintained its 1,110 pence price target on the stock, noting that discoverIE’s valuation implies a 33% discount to Diploma and a 44% discount to Halma.
“discoverIE’s 4Q and full-year update indicates a clear acceleration in trading momentum into the year-end,” Cavendish analyst Guy Hewett wrote. “We reiterate our view that discoverIE’s proven growth strategy – focused on long-term, structurally growing markets across Europe, North America and Asia and a diversified customer base – will support very attractive shareholder returns.”
Edison echoed this view, arguing that a roughly 30% peer discount on a price-to-earnings basis is “overdone” given resumed organic revenue growth and continued progress towards margin targets.
“Considering that organic revenue growth has resumed, and the company continues to make good progress towards its margin targets, we believe this discount is overdone,” Edison analyst Katherine Thompson stated. “With an active M&A pipeline and a disciplined approach to valuation, we expect further acquisitions to boost growth and earnings.”
Searching for the Perfect Broker?
Discover our top-recommended brokers for trading or investing in financial markets. Dive in and test their capabilities with complimentary demo accounts today!
- IG Top-tier regulation – Read our Review
- eToro Wide range of instruments available to trade – Read our Review
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
