Credit Suisse downgrades Intertek to 'underperform'

Credit Suisse has downgraded Intertek to ‘underperform’ from ‘neutral’ and cut the price target to 3,200p from 3,400p as it took a more cautious view on the rate of recovery in the resources operations and increased risk to its consumer and product divisions.

The bank said it expects organic growth to remain constrained in the shorter term with -0.2% organic growth in 2016 and 1.6% in 2017.

In the medium term, CS reckons organic growth can return to mid-single digit growth rates but said the path to this level of growth is likely to be constrained by the resources operations and rising risks related to geopolitical uncertainty.

“Given its operational exposure we think that Intertek is the most exposed of the major staffing companies if protectionist policies lead to indigestion in global trade routes. From a more positive perspective we think that Intertek can continue to add value and incremental growth from combining organic progression with further M&A.”

The bank cut its earnings per share forecast for 2017 and 2018 to 179p from 180.8p and to 191.2p from 194.3p, respectively.

At 0910 GMT, the shares were down 2.5% to 3,475p.