Broker snap: Smiths Group isn't boring, it's resilient

8th Aug 2012 16:33

Galvan Research has labelled technology firm Smiths Group as a 'buy' with a target price of 1,200p, hitting back at Investec's claim in May that the stock is 'boring'.Following the firm's third quarter trading update, Investec reduced its target price for the stock, saying that while there was no major surprises, there also wasn't any reason to get excited: "IMS reads cautiously, but the company guides that it is on track to meet full-year expectations. No major surprises in the statement, which should reassure, but frankly the stock is just a little boring at this stage," the broker said. However, Galvan's head of research, Andrew Gibson, said on Wednesday: "Smiths Group may have been seen as 'boring' in May by Investec, but with the shares up some 10% since then from a relatively low price/earnings ratio of 10, the note has clearly failed to take on board the attractions of a company that confirmed it was on track to meet full-year expectations."This is quite an achievement in the present economic environment, and together with the triple test of the 200-day moving average in June, the stock is rated a 'buy' at Galvan Research," he said.Galvan says that Smith Group's shares have delivered an "extended base formation" during the past 12 months. While there is no sustained price action below the rising 50-day moving average of 1,040p, it reckons that there is impled upside back towards the former July 2011 resistance of 1,200p or higher.BC