SocGen downgrades Intertek on valuation

Societe Generale downgraded Intertek to ‘sell’ from ‘hold’ on valuation grounds.

The bank said the strengths of Intertek’s model and the strategy deployed by the new chief executive are more than offset by negative 12-month total shareholder return after an increase of around 50% in the share price since September 2015. It also pointed to very high trading multiples.

SocGen said the company’s first-half numbers came in close to consensus expectations, with revenue of £1.2bn and adjusted operating profit of £186m.

The French bank lifted its price target on the stock to 3,300p from 3,230p, as it benefits from the slight increase in its profit forecasts.

On Monday, Intertek reported a jump in first-half profit as revenue grew strongly and said the Brexit vote was unlikely to affect its growth opportunities.

Pre-tax profit in the first half rose to £172.5m from £149.8m on revenue of £1.20bn, up from £1.06bn in the same period last year.

The company declared an interim dividend of 19.4p per share, up from 17p in the first half 2015.

Intertek said it was on track to deliver “robust” full-year revenue growth at constant currency and continue to benefit from it recent acquisitions.

At 1005 BST, shares were down 2.1% to 3,472p.