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(Sharecast News) - Analysts at RBC Capital Markets raised their target price on TT Electronics from 115p to 160p on Thursday, saying the group had returned to a steadier footing following a strong first half and continued operational progress.
RBC also lifted its fullyear underlying earnings forecast by 9%, citing robust sales momentum, margin improvement and further selfhelp benefits. RBC said TT had delivered around 4% underlying organic growth in the first half, excluding the impact of the Plano plant closure and an EMS customer site transfer, and expects a similar rate in the second half. It also noted that orders remained supportive, with a booktobill ratio of 112% for the group and 114% in its power division.
The Canadian bank said TT's order book now covers the remainder of the year for its power and EMS units and around ten weeks for components. Notable contract wins included a multiyear agreement with RollsRoyce for power electronics across large civil aircraft engines and a strategic partnership with MBDA to strengthen European access.
Margins expanded to 8.1% in the first half, an improvement of 230 basis points, with further restructuring benefits expected to flow through in the second half. TT now sees its fullyear outlook ahead of consensus, and RBC's updated EBITA estimate of £39.4m implies only modest organic improvement, with incremental cost savings expected to support earnings.
RBC, which has a 'sector perform' rating on the stock, also noted that TT was evaluating a potential sale of its components business following a strategic review after the division returned to profitability in the first half, generating £1m of profit at a 2.7% margin, with order intake up 26% yearonyear. RBC said early interest in the unit was encouraging, but added that any transaction would depend on valuation, with no certainty of outcome.
Reporting by Iain Gilbert at Sharecast.com
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