Shares in discoverIE Group PLC, a designer and supplier of customised electronics to industry, were up 7% in the wake of its prelims with broker finnCap suggesting there may be further for the stock to go.
While discoverIE's shares are currently trading at 854p finnCap values them at 1,100p.
The company reported a noteworthy increase of 18% in sales for the fiscal year 2023, 10% of which was organic growth.
This growth has been backed by strong design activity, with new design wins amounting to a lifetime value of £273m, an increase of 11% from the previous year. These achievements, alongside a strong order book, lay a solid foundation for continued growth, finnCap said in a note.
discoverIE has improved its operating margins, rising from 10.9% to 11.5%, and has seen an adjusted EPS growth of 20%, it also pointed out.
The company's products, which are essential components in its customers' applications, represent a small proportion of the total cost, thereby establishing a highly strategic position within its target markets, finnCap told clients.
These markets, which include renewables, transportation, medical, and industrial & connectivity, are structurally growing. These sectors' consistent growth and the essential nature of discoverIE's products within them mean the company is well-positioned for the future, the note said.
In the wake of the positive results from 2023, finnCap has upgraded its EPS estimate for discoverIE in FY 2024 by 4%, suggesting potential for further increases.
Despite the challenging macroeconomic background, the company has a proven growth strategy and diversified customer base across Europe, North America, and Asia. So, finnCap expects the electrical group to continue to deliver strong results.