Spectris (SXS)

Sector:

Electronic and Electrical Equipment

Index:

FTSE 250

2,678.00p
   
  • Change Today:
    -35.00p
  • 52 Week High: 2,898.00
  • 52 Week Low: 2,188.00
  • Currency: UK Pounds
  • Shares Issued: 115.95m
  • Volume: 346,207
  • Market Cap: £3,105.26m
  • RiskGrade: 154
  • Beta: 1.66

Berenberg drops Spectris to 'sell' and warns of 'trouble ahead'

By Iain Gilbert

Date: Tuesday 06 Aug 2019

LONDON (ShareCast) - (Sharecast News) - Analysts at Berenberg dropped precision instrumentation manufacturer Spectris 's recommendation from 'hold' to 'sell' on Tuesday, telling clients that "there may be trouble ahead".
The German broker said recent events had increased the downside risk to both earnings and valuation for Spectris, noting that in the near term, there was a combination of increased macro risk, lower-than-expected self-help savings, limited order visibility and a high, albeit "not unusual", second-half weighting (of 70.0%) to earnings before interest and taxes.

But Berenberg's concerns didn't end there, over the longer term, it now expects a "slower and more-complex turnaround" than previously thought.

"In our view, Spectris' valuation ignores these heightened risks," it said.

"Management's target of an 18% operating margin looks increasingly difficult to achieve, particularly without significant changes to the portfolio. Selling assets in this environment will be tough, particularly at valuations at or above Spectris's trading multiple."

Berenberg, which also cut its target price on the firm's shares down to 2,050p from 2,440p, said it found "few positives" in Spectris' first-half statement.

The analysts also highlighted the fact that Spectris' organic growth of just 1% suggested "a material slowdown" in May and June, while pointing out that the firm's adjusted EBIT had been supported by around £3.5m of higher capitalised development costs and a £1.0m IFRS 16 benefit - meaning margins actually declined 20 basis points on a like-for-like basis.

By end 2019, growth was set to have slowed in eight out of nine of the company's markets, up from five in the first half.

And the EBIT headwind from the US-China trade war could outpace forecasts, they added, a fact made worse by the low visibility on orders and because the fourth quarter was set to be the biggest contributor to earnings.

Furthermore, cost inflation was eating away at the savings from the restructuring of the business, further disruption from the three ongoing mergers was also possible and Berenberg's confidence in management's ability to hit its long-term targets had also waned.

"Finally, we question the potential shape of the pro-forma business, with higher margins potentially coming at the expense of greater cyclicality."

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Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

Note 2: RiskGrade figures are provided by RiskMetrics.

 

Spectris Market Data

Currency UK Pounds
Share Price 2,678.00p
Change Today -35.00p
% Change -1.29 %
52 Week High 2,898.00
52 Week Low 2,188.00
Volume 346,207
Shares Issued 115.95m
Market Cap £3,105.26m
Beta 1.66
RiskGrade 154

Spectris Star Ratings

Compare performance with the sector and the market.
more star ratings
Key: vs Market vs Sector
Value
86.21% below the market average86.21% below the market average86.21% below the market average86.21% below the market average86.21% below the market average
68.42% below the sector average68.42% below the sector average68.42% below the sector average68.42% below the sector average68.42% below the sector average
Price Trend
62.68% above the market average62.68% above the market average62.68% above the market average62.68% above the market average62.68% above the market average
15.00% above the sector average15.00% above the sector average15.00% above the sector average15.00% above the sector average15.00% above the sector average
Income
34.39% below the market average34.39% below the market average34.39% below the market average34.39% below the market average34.39% below the market average
18.18% above the sector average18.18% above the sector average18.18% above the sector average18.18% above the sector average18.18% above the sector average
Growth
32.88% above the market average32.88% above the market average32.88% above the market average32.88% above the market average32.88% above the market average
21.05% above the sector average21.05% above the sector average21.05% above the sector average21.05% above the sector average21.05% above the sector average

What The Brokers Say

Strong Buy 4
Buy 2
Neutral 5
Sell 0
Strong Sell 2
Total 13
neutral
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

Spectris Dividends

  Latest Previous
  Interim Final
Ex-Div 10-Oct-19 23-May-19
Paid 08-Nov-19 28-Jun-19
Amount 21.90p 40.50p

Trades for 20-Nov-2019

Time Volume / Share Price
16:35 107,012 @ 2,678.00p
16:29 94 @ 2,691.00p
16:29 83 @ 2,689.00p
16:29 6 @ 2,691.00p
16:29 101 @ 2,691.00p

Spectris Key Personnel

CEO Andrew Heath
CFO Derek Harding

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