JPMorgan slashes Spectris price target after profit warning

JPMorgan Cazenove cut its price target on Spectris on Thursday to 2,750p from 2,950p as it downgraded forecasts following the company’s profit warning a day earlier.

"Spectris’s profit warning yesterday confirmed our thesis that slowing orders meant consensus forecasts were too high unaided by several tough end markets including China, life sciences and more recently EVs," it said.

"The updated guidance still relies on at least mid single digit organic growth in H2 despite commentary suggesting that trends in key end markets are not improving and a higher H2 weighting than is typical."

As such, JPM said it sees risk to the updated guidance and reduced its forecasts by around 5% below guidance, as it continues to see risk to forecasts, unless order intake picks up significantly in the next couple of months.

"Moreover, with the portfolio rationalisation complete, the margin expansion story less exciting from here (in our view) and uncertainty over order intake, we see little reason to own the shares currently," it said.

"While shares have fallen 20% year-to-date, we remain ‘underweight’ and continue to see risk/ reward as unfavourable."