Halma's CenTrak acquisition to boost earnings, says Investec

Halma’s shares climbed on Friday as Investec said its acquisition of CenTrak will add to revenue and profit growth in 2016.

The healthcare devices maker is paying $140m (£96.3m) for CenTrak, a Pennsylvania-based maker of sensors, from private shareholders.

“CenTrak bears the hallmarks of a Halma acquisition: the application of IP in a market with strong regulatory drivers, excellent growth and high margins, with scope for expansion internationally and into other niches.

“This takes the sum spent by Halma on acquisitions in full year 2016 to around £190m and net debt to around 1.1x earnings before interest, tax, depreciation and amortisation (EBITDA). We estimate that acquisitions will add almost 4% to revenue and operating profit growth in full year 2016 and around 6% in full year 2017.“

Investec reiterated its ‘hold’ rating and cut its target price to 833p from 840p. The broker adjusted its full-year 2017 and 2018 earnings per share estimate up 2.5% but the “devaluation of UK Electronic & Electrical Equipment peers brings our target price down fractionally”.

Shares rose 0.75% to 810p at 1313 GMT.