Exane BNP upgrades Intertek to ‘outperform’

Exane BNP Paribas upgraded Intertek on Wednesday to ‘outperform’ from ‘underperform’, saying it sees 20% upside from a re-rating as the market prices in stronger mid-term earnings per share growth.

Exane said that after three years of multiples and earnings expectations both grinding lower, it feels like many investors have given up on Intertek.

"This makes it interesting," said Exane. "In 2024 we expect strong margin expansion, while regulatory and fiscal tailwinds should support strong volume growth.

"A material improvement in margins combined with organic growth above the pre-Covid trend, should be sufficient to stem the de-rating in place since late 2020."

Exane said it expects a combination of exposure to US industrial investment and electrification, a recovery in consumer products and incremental growth in sustainability assurance to drive higher organic sales growth over the next three to five years.

At 1040 GMT, the shares were up 3.6% at 4,248p.