leadf
logo-loader
viewProactive Group

IMI downgraded by Liberum on valuation grounds as upside expected to shrink

Analysts at the broker said that they saw “limited potential upside” from IMI's Precision Engineering arm, which accounts for 60% of the group’s earnings

Engineers
Despite the downgrade, the broker left its target price for the firm unchanged at 1,275p

IMI PLC (LON:IMI) has been downgraded to ‘hold’ from ‘buy’ by City broker Liberum on valuation grounds after a strong set of first-half results sent shares climbing towards the firm’s target price.

Analysts at the broker said that while the FTSE 250 engineering company had seen an outstanding performance from its Critical Engineering division, which delivered organic growth of 6% in the period, they saw “lIMIted potential upside” from its Precision Engineering arm, which accounts for 60% of the group’s earnings.

READ: Morgan Stanley boosts IMI with upgrade to ‘overweight’ but blights Rotork with the reverse move

“We expect organic growth [for the Precision division] to slow from the 8% in [the first half] to 4.5% in [the second half] as comps get much tougher, and this will also be the case in [the first half of 2019]” the broker said.

“We therefore see only small upgrade potential for next year. Continued recovery in Critical would offer upside risk to our estimates, but we do not have the confidence to extrapolate one strong set of results. In addition, we also see some risk to the 4.3% organic growth consensus is forecasting for Precision next year,” they added.

Despite the downgrade, the broker left its target price for the firm unchanged at 1,275p.

In its half-year results released on Tuesday, IMI reported a 16% increase in pre-tax profits to £113mln compared to the first half of 2017, while revenues climbed 8% to £915mln and the dividend was upped 3% to 14.6p.

In mid-morning trading Wednesday, IMI shares were down 1.6% at 1,222p.

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Mandalay Resources latest drilling shows impressive results from Youle...

Mandalay Resources (TSE: MND-OTCQB: MNDJF) President and CEO Dominic Duffy joined Steve Darling from Proactive with news the company has seen some very strong numbers from the latest drill results on the Youle Deposit at their Costerfield Project. Duffy telling Proactive the numbers returned...

2 hours, 40 minutes ago

2 min read