Berenberg starts Judges Scientific at 'buy'

The bank said Judges is one of the highest quality companies in the UK mid-cap market, evidenced by its "stellar" track record.

It noted that between FY15 and FY22, revenue grew at an 11% compound annual growth rate and margins progressively improved by more than 1,000 basis points to 27% from 16%. In addition, over £150m has been deployed across 22 acquisitions since inception.

"We think Judges offers strong growth fundamentals, high margins and a significant opportunity to consolidate a fragmented market," Berenberg said.

It pointed out that Judges sells instruments into end-markets such as geotechnical engineering, research and advanced materials, which it said benefit from attractive structural drivers - for example, increasing enrolment in higher education and demand for superior materials performance.

"We estimate that these end-markets are growing at 3-7% per annum and that Judges will grow organically by at least 5% pa to FY25, which we view as impressive relative to our UK scientific instruments peer group.

"We think Judges’ historical outperformance versus this group highlights management’s strong track record of identifying quality companies under its buy-and-build strategy."