Davy downgrades Volution to ‘neutral’

It said that while it’s "very positive" on the Fantech deal and the overall outlook for Fantech, the stock now looks up with events, having risen more than 75% in the past year and more than 35% in the year to date.

Davy said: "It is on circa 20x/17.5x our July 2025/26 earnings forecasts which we think is broadly fair and our valuation analysis yields a price target of 615p, broadly similar to the current level; hence for now at least we are pulling back our recommendation to ‘neutral’, having been 'outperform' since initiating coverage in March 2021 - since when the stock has outperformed the FTSE 250 by around 50%."

Ventilation products supplier Volution announced in September that it had agreed to buy Fantech Group in Australasia from Elta Group for up to AUD280m (£144m).

Fantech, which includes the Fantech, Ideal Air, NCS Acoustics, Air Design, Major Air, Systemaire and Burra Steel brands, is a provider of both commercial and residential ventilation in Australia and commercial ventilation solutions in New Zealand.

At 1210 BST, the shares were down 3% at 575p.