ShoreCap raises estimates for Intertek but keeps at 'hold'
Intertek Group
4,664.00p
16:35 23/12/24
Analysts at ShoreCap raised their profit estimates for Intertek despite concerns around the product testing and inspection specialist's ability to deliver on its targets.
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At its last Capital Markets Event, the company had guided towards mid-single plus digit sales growth at constant currencies, alongside margins at the earnings before interest and taxes level of 17.5% and above.
Among other things, ShoreCap noted how profitability was visible to clients in competitive markets, which over time meant that they would trend towards Intertek's cost of capital.
Its ability to retain staff was another source of concern.
On the flip-side, there were "attractive" opportunities to be had in new business areas, including in the likes of ESG and corporate energy efficiency.
Their estimates for the company's adjusted earnings per share in 2023 and 2024 were raised by 4% and 10%, respectively.
"This leaves fundamental valuation metrics relatively attractive to our minds,though we see risks to guidance, particularly on margins.
"We watch for delivery,noting a cash flow derived 'fair value' estimate of 4200p. HOLD."