discoverIE Group PLC shares are trading at a more than 60% discount to the price set by City broker finnCap, which provided its assessment of the potential of the electronics group in the wake of its purchase of £19 million purchase of Magnasphere last month.
finnCap set a price target of 1,220p for the stock compared with the current price of 743p.
In a note out on Tuesday, it told clients: “discoverIE’s proven growth strategy, focused on long-term, structurally growing markets across Europe, North America and Asia, and a diversified customer base, continues to deliver despite the difficult macro background."
Turning to the latest acquisition, the broker said the FTSE 250 group's purchase of US-based Magnasphere, a magnetic sensor and switch manufacturer, is a “high-value-add” of a “high-value business” which operated with a margin of 28% in 2021.
Analyst Guy Hewitt has upgraded his forecast for earnings per share by 2% for the next full year to reflect the contribution of the newly-acquired business.
Vendor shareholder approval is expected during the final quarter ending in March 2023.
finnCap added that discoverIE can expect “good headroom for further enhancing acquisitions” a vital aspect of the organisation’s growth strategy, with management confirming the opportunities for further acquisitions remain positive.