Broker snap: Still work to be done at IMI, says Jefferies

5th Oct 2012 09:53

Jefferies has reiterated its 'hold' rating and 930p target price for engineering group IMI, saying that while it is a good business, there's still work to be done to satisfy 'near-term concerns'.At IMI's capital markets day yesterday, the group reinforced its focus on "strategic/'sweetspot' convergence" and the benefits this should bring, Jefferies said on Friday morning.Management outlined that the group has a significant exposure to a number of niche markets - 17 sectors/end markets were identified - with IMI having market leading positions in 12 of these. IMI is focusing on businesses/end markets that are involved in Fluid Technology, where they possess "niche leadership" and are exposed to "attractive growth drivers", Jefferies said.The broker explained: "Management are targeting 75% of sales in their sweetspot (currently 55%) by 2017, and £20m of incremental year-on-year investment maybe required over that period."Whether or not the group will be spending £100m on this investment by 2017 clearly depends on the progress they are making with the top line. We believe they will have to manage this carefully in the near-term, especially given the possibility of markets remaining challenging in the near-term."By 09:46 on Friday, shares were up 1.79% at 967.98p.BC