On Thursday, CFRA downgraded IMI Plc. (LON:IMI:LN) (OTC: IMIAY) from Buy to Hold and lowered the price target to GBP17.00 from GBP20.00. The adjustment in rating and target price follows IMI's latest interim management statement, which revealed a 3% year-over-year decline in Q3 2024 revenue, although there was a 1% organic year-over-year increase. This growth was primarily attributed to the Automation segment, which helped to mitigate weaker results from the Life Technology sector.
Despite the revenue dip, IMI's organic sales in the Automation segment showed resilience, helping to counterbalance the downturn in the Life Technology sector. However, the Life Science and Fluid Control subsegments experienced a more significant 10% organic year-over-year sales drop, impacted by reduced demand within the global life sciences device market.
In addition to the revenue and sales performance, IMI completed a substantial GBP100 million share buyback in October. The company's management has reiterated its earnings per share (EPS) guidance for the year, projecting figures between GBP1.20 and GBP1.26. CFRA has kept its EPS estimates for IMI unchanged at GBP1.21 for 2024 and GBP1.28 for 2025.
The downgrade to Hold reflects CFRA's view that, while IMI maintains solid fundamentals, the company is likely to face short-term obstacles that could restrict the stock's potential for price growth. These challenges include currency fluctuations, uneven performance across sectors, and expected restructuring costs. CFRA's revised 12-month target price is based on a 9.6x EV/EBITDA multiple applied to IMI's projected 2024 EBITDA, aligning with the company's three-year average forward EV/EBITDA ratio.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.