On Monday, Melrose Industries PLC (MRO:LN) (OTC: MLSPF) received an upgrade in its stock rating by RBC Capital. The firm moved its stance from Sector Perform to Outperform, maintaining a price target of GBP6.50 on the company's shares. This change in rating comes after a notable decline in the share price, which has dropped approximately 15% from its April highs.
RBC Capital's decision is backed by the belief that the company's fundamentals are robust, with expectations of further earnings upgrades. Specifically, they project a 4% increase above the consensus for the company's 2024E EBITA. The analyst from RBC Capital also noted that the business is experiencing healthy growth.
The downgrade in Airbus's delivery forecast was also mentioned but is not seen as a considerable obstacle for Melrose Industries. The analyst pointed out that the primary growth driver for the company is the engine aftermarket, which suggests resilience against such external factors.
Additionally, Melrose Industries has an ongoing share buyback program, which RBC Capital views as a positive factor supporting the company's stock. The combination of these elements has led to the upgrade to an Outperform rating, with the price target remaining steady at 650p.
The firm's maintained price target and rating upgrade reflect a confidence in Melrose Industries' ability to navigate the current market environment and capitalize on its growth potential despite recent challenges in the broader aerospace sector.
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