Jefferies downgraded Intertek on Wednesday to ‘hold’ from ‘buy’, citing near-term exposure to China, broader macro challenges and deteriorating consumer confidence, which it said increases uncertainty given the company’s higher exposure to consumer testing.
“As a result we see risks that performance may lag peers though to FY23,” it said.
“Intertek shares trade on 19.3x FY23 price-to-earnings, a circa 10% discount to peers, suggesting concerns may be priced in (albeit on free cash flow yield it is more in line on our estimates), but we see limited catalysts to change this view near-term and thus a more balanced risk-reward.”
Jefferies slashed the price target on Intertek to 4,700p from 6,650p.
In the same research note on testing, inspection and certification stocks, Jefferies reiterated its ‘buy’ rating on Applus and maintained its ‘buy’ stance on Bureau Veritas. It rates SGS and Eurofins at ‘hold’.
