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Halma slumps as Berenberg says valuation 'remains a hurdle'

Thu 17 June 2021 08:24 | A A A

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(Sharecast News) - Shares in safety equipment specialist Halma slumped on Thursday after Berenberg said the stock's valuation "remains a hurdle".

Given the valuation issue - the shares trade at 47.0x March 2022 price-to-earnings and 31.4x EV/EBITDA - the bank said it prefers buy-rated Oxford Instruments, Diploma and Spectris, all of which trade on "more palatable multiples for similar exposure".

Still, Berenberg upped its price target on hold-rated Halma to 2,575p from 2,385p, saying it remains of the opinion that there are few better long-term investments.

"Halma is one of the highest-quality companies in the UK industrials sector, in our view, having delivered a 13% earnings per share compound annual growth rate since 2005 and 45 years of uninterrupted dividend growth. It has demonstrated good resilience, but not immunity, to the Covid-19 downturn," Berenberg said.

"Looking ahead, we think expectations are well managed and, with M&A also potentially on the cards, the risk to earnings is skewed to the upside."

At 1050 BST, the shares were down 5.1% at 2,707p.

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.


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