Citi upgrades Halma to 'buy', says shares no longer include photonics premium

12th Jun 2026 12:35

(Sharecast News) - Citi upgraded Halma to 'buy' from 'neutral' on Friday and lifted the price target to 4,600p from 3,700p after the company's results a day earlier.

Shares in the safety equipment firm tumbled on Thursday as it posted a jump in full-year earnings but gave a conservative outlook.

Citi said in a research note that Halma shares are no longer pricing in a photonics premiums. "Halma's FY27 guidance has driven a circa 4% digit upgrade to our FY27 EBIT forecast, meaning today's more than 15% share price decline has driven a near 20% de-rating in the shares," it said.

"It is of course all about photonics, where the circa 30% growth guided in FY27 is a moderation from the circa 50% seen in FY26."

Citi said comments from the call suggest photonics guidance reflects the order book and ramp-up visibility, "although of course the upwards revision to photonics growth guidance during FY26 points to a history of prudence".

The bank said Thursday's approximately £2.7bn decline in market cap is equivalent to more than 4x sales for photonics, and de-rates the group from circa 28x EV/EBITA to 23x on FY27, in-line with the 2022-23 average which it sees as the "pre-photonics" norm.

"We continue to expect photonics to remain attractive, and after today's reaction, the shares no longer include a 'photonics premium' and we upgrade to buy."

At 1233 BST, the shares were up 1% at 3,966p.