Mitie Group PLC (LSE:MTO)’s strong set of financial results surpassed City analysts’ expectations, leading to buy recommendations on the stock from brokers Stifel, Peel Hunt and Liberum.
The outsourcing company’s revenues hit a record £4.5 billion, driven by higher contract prices, growth in key accounts, a 37% rise in project upsell revenues and infill mergers and acquisitions.
Profit before tax (PBT) grew by 33% to £201 million, outperforming Peel Hunt's projection of £189 million.
Peel Hunt analysts are expected to raise their 2025 PBT forecasts by 2% to reflect this “trading momentum”. They anticipate a share price re-rating from the current 11 times price-to-earnings (PE) multiple.
“We confidently reiterate our buy rating,” they said, giving the stock a 145p price target.
Liberum also maintained its buy recommendation with a target price of 135p, noting that Mitie’s 2024 financial year results were ahead of guidance.
Earnings targets were given a 2% uplift, with analysts calling the current PE multiple “undemanding given the momentum”.
Headline figures ‘impressive’
Mitie has “good momentum heading into (its) new three-year plan”, said analysts at Stifel.
“Headline figures are impressive, in our view reflecting the group's internal initiatives and technology differentiation,” they added.
Stifel has a 7% revenue uplift forecast for the current financial year at “broadly consistent” margins.
“Elsewhere, the group's balance sheet strength and FCF (free cash flow) generation should enable it to continue undertaking buybacks (£50m announced in April 2024) and infill M&A,” the bank added.
Stifel remains a buyer with a 145p price target.
Mitie shares were down 0.3% to 119.9p on Thursday.