On Wednesday, Spectris Plc (SXS:LN) (OTC: SEPJF) received an updated stock rating from JPMorgan, moving from 'Underweight' to 'Neutral'. The firm also adjusted the price target for Spectris to GBP29.50, an increase from the previous GBP27.50. The adjustment follows Spectris's recent performance and future expectations.
Spectris's adjusted EBITA fell short of consensus expectations by 5% on Tuesday, following a profit warning issued in mid-June. Despite this, the company has maintained its guidance for the fiscal year 2024. JPMorgan has slightly reduced its forecasts for Spectris but notes that the risk to organic consensus expectations remains, with their estimates being 4% below the current consensus.
The firm anticipates an improvement in earnings momentum in the near term, especially as Spectris's recently announced acquisitions are expected to be finalized before the third quarter. The consolidation of these deals is predicted to positively impact earnings before any potential organic downgrades materialize.
Additionally, Spectris's shares have seen a year-to-date decline of 22%, underperforming the SXNP index by 32%. This performance has led JPMorgan to view the risk/reward balance for Spectris's shares as more even at this stage.
JPMorgan has also updated its valuation methodology for the time of year, rolling forward its price targets to December 2025 from June 2025. The firm applies its target multiples to its 2026 forecasts, indicating a longer-term perspective on Spectris's valuation.
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