Components specialist discoverIE’s half-year numbers showed the first positive the first order growth and positive book-to-bill since September 2022, notes HSBC.
Furthermore, design wins accelerated in the last four months as year-to-date growth reached 25%.
Revenues should continue to grow from here while margins should continue to expand.
Looking ahead, HSBC believes that consensus estimates do not yet factor in the company's 2025 operating margin target.
The broker’s target price target rises to 925p from 900p with a ‘buy’ rating, even though revenue estimates have been trimmed slightly for this year.
Royal Bank of Canada (TSX:RY) adds acquisitions remain a key strategic plank, though increased group scale may bring challenges.
The group also has a robust organic growth track record.
'Sector Perform' with a 760p price target set in line with the 10-year average P/E of 19 times, is the bank's recommendation.