DiscoverIE Group plc has received positive endorsements from UK brokers following the customised electronics group’s better-than-expected trading update on Wednesday.
finnCap analysts upgraded their 2023 earnings-per-share (EPS) expectations by 2% given the order book “remained at a higher-than-expected level following a strong order intake” in the fourth quarter of 2022.
DiscoverIE “has consistently traded ahead of expectations” in the current year despite cautious forecasts, resulting in a 13% higher full-year 2023 EPS prediction compared to 12 months ago.
DiscoverIE is particularly well funded at a 0.9x gearing, “ leaving good headroom for further enhancing acquisitions”.
“We iterate our view that 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,” said finnCap.
Peel Hunt was also impressed with the group’s “positive trading momentum” across both divisions as well as being encouraged by the easing of supply chain issued and reduced inflationary pressures.
The acquisition outlook is also “looking very healthy” given the strong balance sheet is in “excellent shape” at a less than 1x net debt-to-EBITDA ratio.
Peel Hunt reiterated its buy recommendation with a 1,000p price target while finnCap issued a 1,220p price target against a publication price of 776p.