Sales momentum at Renishaw will not last, warns N+1 Singer

11th Nov 2014 10:21

An extremely brief trading update from Renishaw was well-received by the market on Tuesday, though broker N+1 Singer has maintained a neutral stance on the stock due to a cautious outlook for next year.The company, which specialises in measurement, motion control, spectroscopy and precision machining, has now released four updates on trading since the start of October.Tuesday's statement said that the strong demand across its product lines has continued into the second quarter.Sales reached a record £101.4m in the first quarter ended 30 September, up 28% year-on-year. N+1 Singer estimated that underlying sales were up 12% in the first quarter.However, analyst Jo Reedman said: "While underlying demand is very positive, we believe the main driver of outperformance is irregular orders, which we would not expect to recur in [the fiscal year ending June 2016]."She said: "Management has given very little information about these orders due to their commercial sensitivity, but we believe they represent shipments to Apple's contract manufacturers in the Far East."Reedman has lifted her estimate for current-year (ending June 2015) underlying sales growth from 10% to 11%, but has left next year's 8% growth forecast unchanged."The group has good momentum for now, but our enthusiasm is tempered by the profile we have forecast of declining profitability [next year]," she said.N+1 Singer has lifted its target for the shares from 1,690p to 1,760p, but kept a 'hold' recommendation for investors.The stock was up 9.8% at 1,942p by 11:26.