Analysts at Berenberg lowered their target price on industrial and electronics products distributor RS Group from 1,230.0p to 1,010.0p on Wednesday but acknowledged that the group was “on a roll”.
Berenberg said the group formerly known as Electrocomponents’ recent first-quarter trading update came with the firm’s sixth consecutive upgrade to earnings.
The German bank said the reasons for RS’ upgrades were “stronger and more resilient” end-market growth than previously expected, consistent market share gains, a markedly improved Asia-Pacific business, disciplined pricing, supply chain and cost management, and selective mergers and acquisitions.
“While industrial data points to slowing growth in industrial activity, to which RS Group is not immune, the group has shown the ability to significantly outperform, and we expect that to continue. For FY 2024, shares trade on 15x P/E and 10x EV/EBITDA,” said the analysts.
Berenberg, which stood by its ‘hold’ rating on the stock, said the downgrade to its price target and valuation on RS came as a result of efforts to reflect changes in peer-based multiples.
Reporting by Iain Gilbert at Sharecast.com
