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(Sharecast News) - Analysts at Berenberg lifted their target price on James Fisher from 790p to 850p on Tuesday after attending the group's capital markets day earlier in June, saying it came away "very encouraged" about the growth prospects for its defence division.
Berenberg said the event highlighted James Fisher's differentiated technologies, strong market positions and growing confidence among senior management, with orderintake momentum expected to build over the next 12-18 months. Forecasts for FY26-FY28 were left unchanged, while FY29 estimates were introduced.
The German bank said James Fisher's defence unit offers "significant" growth opportunities, particularly in Tactical Delivery Vehicles and its new Stealth Multirole rebreather, which together represent a serviceable obtainable market of around 3.2bn, compared with FY25 revenue of 100m. TDVs currently face no direct competition, and Berenberg said a bluesky scenario for these two products alone could present 100% upside to its FY29 adjusted underlying earnings forecast of 50m.
Berenberg also sees further margin upside within the defence unit, noting the division's high operational leverage and a growing base of recurring, highermargin service revenue from commercial diving and rescuesubmarine contracts. Its new FY29 EBITAmargin estimate stands at 11.5%, but the broker believes midteens margins to be achievable over the medium term - above the company's current 10% target.
At group level, Berenberg said all three divisions now have clear plans to lift margins into the midtohighteens, while central costs have stabilised at 3.5% to 4% of revenue following recent investment in personnel. As a result, it views the group's 10% adjustedEBITA margin target as "very achievable" and likely to be met ahead of FY28.
Berenberg, which reiterated its 'buy' rating on the stock, added that James Fisher's valuation remains "compelling", with the shares trading on 19x CY26 earnings, falling to 15x in CY27, and a CY27 enterprise value to EBITDA multiple of 5.1x. With a doubledigit freecashflow yield and scope for dividend payments to resume, Berenberg said the stock offers around 70% upside to its new target.
Reporting by Iain Gilbert at Sharecast.com
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