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(Sharecast News) - RS Group rallied on Wednesday after Deutsche Bank upgraded the stock to 'buy' from 'hold' and hiked the price target to 775p from 700p as it said the recovery case is strengthening.
"A prospective end to the Iran war should position European cyclicals for improved performance as confidence in industrial activity rebuilds - we would expect RS to be a beneficiary of this," the bank said. "Our recent caution in respect of spillover risk from the Iran war has not materialised, with demand robust and PMI lead indicators positive."
DB noted that it has historically found that the international manufacturing cycle has explained 2/3 of RS Group's growth given its exposure to short-cycle industrial and MRO (maintenance, repair and operations) demand.
"Based on historical correlation and recent PMIs, our model implies 4% like-for-like growth is now possible for the business in FY27," it said. "The group would also lap some prior-year self-inflicted execution issues through FY27, supporting growth."
At 1103 BST, the shares were up 3.4% at 601.50p.
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