Intertek knocked lower by Credit Suisse downgrade

CS said it expects Intertek's organic growth, along with that of other testing companies, to improve through FY18 and FY19 as resource markets improve. In addition, it reckons Intertek can grow earnings before interest, tax and amortisation margins, maintain good cash conversation and use excess cash for incremental M&A.

"While all positive, we think that the rate of change for margin growth will slow following the particularly strong 2016-2017 performance and will be slower than at either SGS Surveillance or Bureau Veritas. We also expect cash conversion to normalise as capex increases and working capital outflows returns.

"Intertek is a strong company, in our view, with growing profits and cash flow. Relative to other quality growth stocks, however, we think the combination of slower earnings growth and premium valuation means the risk and reward is relatively less attractive at this point."

Credit Suisse has raised its cost of equity for the sub-sector as risks around global trade have increased recently. If these issues escalate - which is not the bank's core thesis - Intertek’s exposure to consumer and electrical products makes it the most exposed.

At 1425 BST, the shares were down 2.8% to 4,761p.