Berenberg raises target price on Spectris

Berenberg said Spectris' full-year results on 23 February included "an impressive beat to consensus forecasts" and highlighted a "significantly better outlook" than it had been expecting.

The German bank highlighted that Spectris now has "strong visibility" on both growth and gross margin recovery in the first half of 2023 and said it expect to see a further "very strong period" for earnings growth.

However, while Berenberg pointed out that the near-term outlook, combined with "a clear medium-term growth and quality improvement story", suggest a "highly attractive investment case", it also opted to continue to "stress caution" about Spectis' more cyclical end-market exposure.

"We still expect a macro slowdown to ultimately affect Spectris, and that slowing order growth (versus progressively tougher comps) and a recovery in overheads will result in a more challenging outlook for H2. In turn, we believe that this limits upside to the share price over the next 12 months," said Berenberg, which reiterated its 'hold' rating on the stock but raised its earnings per share forecasts by 10%.

Reporting by Iain Gilbert at Sharecast.com