Melrose Industries valuation 'up with events', says RBC Capital

RBC Capital Markets downgraded Melrose Industries on Monday to ‘sector perform’ from ‘outperform’ as it argued the valuation was "up with events", but lifted the price target to 540p from 525p.

The bank said the fundamentals remain very supportive, with the business growing well, and it expects further earnings upgrades. It also pointed to the fact that a share buyback is set to start in October.

"However, we think this is all ‘known’ now, even the earnings per share upgrade potential may not surprise the street given traditional management conservatism," RBC said.

"And it is in the valuation already with the blended peer multiple at 11x2025E EV/EBITA versus Melrose at 10.6x (and that is on our above consensus Melrose forecasts)."

At 0825 BST, the shares were down 1.3% at 504p.