Numis upgrades Renishaw to 'add' after strong Q4

23rd Jul 2014 10:31

A strong finish to the year by Renishaw prompted Numis Securities to upgrade its rating on the stock from 'hold' to 'add' on Wednesday after the engineering group beat forecasts with its annual results.The firm, which works in the measurement, motion control, spectroscopy and precision machining markets, reported an 11% decline in adjusted profit before tax (PBT) in the year to June 30th to £70.4m with statutory PBT up 17% at £96.4m.Numis said that PBT came in 12% ahead of its own estimate and 14% above consensus expectations.Revenues grew 2.5% over the whole year to £355.5m but increased by an "impressive" 17.8% in the fourth quarter to a record level of £107m, the broker highlighted."Underlying revenue momentum continues moving in to its new financial year and its recent investment should help capture good growth opportunities aided by increasing global demand for manufacturing sophistication and automation," Numis said."Given these results and current trading we are upgrading our forecasts by 8% and move our recommendation to 'add' reflecting valuation multiples that sit below historic levels."The broker said that the stock trades at 17 times its annualised earnings estimates for 2014, falling to a multiple of 15.3 on 2015 forecasts, which is "undemanding if recent growth prevails".A 1,750p target price was given for the stock, which had jumped more than 15% to 1,695.4p by 10:16.BC