Numis upgrades Spectris after strong fourth quarter

Numis, which maintained its target price of 2,800p, forecast the growth in total sales will continue, albeit at a lower rate than the 13% rise seen in 2017, nearer a 3% rise in 2018.

Numis highlighted the strong growth of some of Spectris’ divisions, with particular attention paid to the industrial controls division, with “industrial distribution business benefiting from internal actions and US market recovery”.

Spectris’ dividend per share was seen as increasing 9% to 61.5 in 2018 and then rising by a further 7% to 66.0p in 2019.

“The capex cycle is positive and this is driving Spectris top line and operational gearing whilst the Project Uplift benefits are still to flow through. Add in the rating, which is not stretched, and the shares should continue to perform."

Numis still has some concerns, however, over the strategy of mixing an equipment and service business and "whether the management can deliver an acceptable ROI on the recent services expansions".

As of 1430 GMT, Spectris shares had risen 1.61% to 2,781.00p.