Spectris (SXS)

Sector:

Electronic and Electrical Equipment

Index:

FTSE 250

2,517.00p
   
  • Change Today:
    -11.00p
  • 52 Week High: 3,005.00
  • 52 Week Low: 2,132.00
  • Currency: UK Pounds
  • Shares Issued: 116.12m
  • Volume: 225,907
  • Market Cap: £2,922.71m
  • RiskGrade: 187

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 2,517.00p
Change Today -11.00p
% Change -0.44 %
52 Week High 3,005.00
52 Week Low 2,132.00
Volume 225,907
Shares Issued 116.12m
Market Cap £2,922.71m
RiskGrade 187

Spectris Star Ratings

Compare performance with the sector and the market.
more star ratings
Key: vs Market vs Sector
Value
85.23% below the market average85.23% below the market average85.23% below the market average85.23% below the market average85.23% below the market average
43.59% below the sector average43.59% below the sector average43.59% below the sector average43.59% below the sector average43.59% below the sector average
Price Trend
23.93% above the market average23.93% above the market average23.93% above the market average23.93% above the market average23.93% above the market average
Sector averageSector averageSector averageSector averageSector average
Income
47.92% below the market average47.92% below the market average47.92% below the market average47.92% below the market average47.92% below the market average
23.81% above the sector average23.81% above the sector average23.81% above the sector average23.81% above the sector average23.81% above the sector average
Growth
1.88% above the market average1.88% above the market average1.88% above the market average1.88% above the market average1.88% above the market average
Sector averageSector averageSector averageSector averageSector average

What The Brokers Say

Strong Buy 3
Buy 1
Neutral 6
Sell 1
Strong Sell 3
Total 14
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 14-Jul-2020

Time Volume / Share Price
16:56 1,126 @ 2,487.73p
16:35 89,670 @ 2,517.00p
16:29 6 @ 2,500.00p
16:29 25 @ 2,501.00p
16:29 56 @ 2,501.00p

Spectris Key Personnel

CEO Andrew Heath
CFO Derek Harding

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