Spectris share-price rise is unjustified, Shore Capital says

Spectris reported a strengthening order book and performance ahead of management expectations on Thursday. Like-for-like sales rose 5% in the fourth quarter as booming sales in Asia more than offset declines in other markets.

Shore analyst Tom Fraine said he expected to upgrade forecasts for adjusted operating profit by 3% for 2021 and 2022. He also noted the scope for operational leverage from a lower cost base.

The FTSE 250 company has good growth opportunities and impressive margin improvements may get better as sales volumes recover, Fraine said. But he said these attributes were more than captured by Spectris's share price which has the stock trading at 25 times Shore's earnings per share forecast for 2021.

"The shares have interestingly underperformed across Q2 and Q3 in each of the past ten years," Fraine wrote in a note to clients. "Although a strong order book and positive momentum could suggest this seasonal underperformance may be avoided in 2021, we believe the 30% share price appreciation over the past 12 months is unjustified given that recent earnings upgrades … do not offset previous downgrades."

Spectris shares rose 0.9% to £33.49 at 12:18 BST.