Berenberg raises target price on Renishaw

Analysts at Berenberg raised their target price on engineering company Renishaw from 5,700.0p to 6,200.0p on Monday, stating the firm appeared to be "poised for a recovery".

Berenberg stated that it had been one month since its "contrarian buy" initiation on Renishaw and, so far, the analysts said their investment thesis was playing out "exactly as expected".

The German bank highlighted that Renishaw's first-quarter update was "bang in line" with forecasts, with Japanese machine tool orders also continuing to show "gradual progress".

However, Berenberg acknowledged that it had received a number of investor pushbacks on its thesis, several of which had been amplified by the stock's recent 20% share price rally.

"Some investors have been deterred by the £680.0m value we place on Renishaw's longer-term investments in additive manufacturing and neurology treatment. However, to apply no value makes little sense to us," said the analysts.

Berenberg added that it does not believe Renishaw's headline multiples "tell the full story" and think investors should consider a sum-of-the-parts methodology.

"Despite the strong run, we continue to think the outlook is attractive, with huge upside potential if certain scenarios play out," said the analysts.