Berenberg lifts target price on Discoverie following H1 update

(Sharecast News) - Analysts at Berenberg lifted their target price for DiscoverIE from 1,050p to 1,100p on Thursday, citing sustained organic momentum, a strengthening order book and earnings running ahead of expectations.

Berenberg, which reiterated its 'buy' rating on the stock, argued that the Discoverie's qualitycompounder model continues to offer upside and said the firm's H1 trading update confirmed a clear acceleration in organic growth, with the group expecting 10% yearonyear organic growth for the half.

Organic orders rose 22%, marking more than a year of consecutive order book build and underpinning future delivery. Berenberg also raised its adjusted earnings per share forecasts by 2% to 3% across the forecast period.

Momentum was broadbased, led by Discoverie's magnetics and controls unit, which grew 13% organically, while sensing and connectivity was now positioned to accelerate as supply lead times normalise and tougher comparators fall away. Orders increased 25% in M&C and 18% in S&C, producing a booktobill ratio of 1.12.

Overall sales rose 13% at constant currency, supported by recent acquisitions, while net debt-to-underkying earnings stood at 1.6x at the end of September, rising to around 1.8x postacquisition, which Berenberg said still leaves roughly £35m of shortterm M&A capacity.

Berenberg added that DiscoverIE's longterm compounding potential remains underappreciated, with management's 17% FY30 EBIT margin target and the benefits of the 3Gmetalworx deal not yet reflected in forecasts, offering a supportive backdrop for shareholder returns. Regulatory approval for the firm's acquisition of 3Gmetalworx was said to be progressing, with completion expected shortly

Reporting by Iain Gilbert at Sharecast.com