RS Group’s beating on a downbeat outlook yesterday was too harsh, according to Royal Bank of Canada (TSX:RY), which sees the current price as a good entry point.
Annual results were good, but the accompanying commentary from the components distributor plus recent management changes spooked investors, says RBC and rebuilding confidence will take time.
Guidance was also 2% below RBC’s previous expectations.
“This is hardly disastrous and should not really have been a huge surprise to the market given weak PMIs, weak electronics and destocking commentary.
“We think valuation is attractive, the balance sheet provides options and that RS1 will continue to take [market] share”.
RBC’s target price is 1,050p, against 785.2p in the market, and ‘outperform’ the rating.