Luceco PLC (LSE:LUCE), the lighting company, fell by over 7% on Tuesday despite reporting guidance-beating full-year results.
One area attracting negative attention is the overall repair, maintenance and improvements market, which is said to be remaining “challenging” despite consumer confidence improving.
Nevertheless, analysts at Liberum are still buyers and believe that through mergers and acquisitions the company can deliver growth and enhance earnings, while keeping its strategic focus.
Liberum analysts said: “Luceco continues to be a strong leader in its industry and the scale of its own facilities in China is very hard to replicate.
“We increase our target price from 155p to 170p to reflect the upgrade and maintain our Buy rating.”
Revenues for the 2023 calendar year are expected to come in at £209 million, £24 million ahead of expectations while underlying earnings are predicted to be at £23.5 million, a trading update revealed.
In fourth-quarter trading, operating margins lifted 0.3 percentage points to reach 11%, while operating profits beat expectations.
John Hornby, the group’s boss, said: “Further strengthening of the group's balance sheet has been driven by the continuation of our track record of strong cash generation, leaving the group well placed to invest for growth and enhance earnings in line with our strategic priorities."