Citi raises target price for Intertek

Citigroup has reiterated its positive stance on shares of Intertek, saying that the stock is now trading at historic valuation multiples.

The bank has raised its target price for Intertek from 4,973p to 5,055p, and maintained a 'buy' rating.

"We are buyers of Intertek. The stock trades towards the low end of the P/E, EV/EBITDA, and EV/sales ranges seen since the start of 2013," Citi said in a research note on Friday.

The product testing, inspection and certification firm reported in July that, on a constant currency basis, first-half revenues rose 8.3% to £1.64bn, while adjusted operating profits rose 13.3% to £245m as adjusted operating margins improved 70 basis points (bp) year-on-year to 15%.

"We believe that ITRK has c.240bps of quantifiable margin opportunity, as well as the opportunity to grow constant currency operating profit faster than across the 2014-19 period," Citi said.

Following significant moves in foreign exchange, the bank has raised its operating profit forecasts for Intertek for 2024 to 4% above consensus.

The stock was up 2.5% at 4,139p by 1130 BST.