Melrose Industries PLC (LSE:MRO, OTC:MLSPF) surged on Tuesday after being dubbed “significantly undervalued” by JP Morgan analysts and having its share price target hiked.
Shares in the aerospace manufacturer climbed 6.2% to 559.6p after the bank upped Melrose’s price target from 650p to 850p, noting “this rose is ready to bloom”.
The aerospace industry is “highly attractive” but also “challenging to understand,” JPM said, which has led to instances where the “intrinsic value” of companies in the sector has being overlooked.
“In recent years this has been the case with Rolls-Royce, MTU Aero Engines and General Electric,” analysts added, “today we think that Melrose is significantly undervalued”.
Melrose last month updated on its risk and revenue-sharing partnerships, which are common in the industry, highlighting 17 of 19 of such deals were now cash-generating.
This left it with some £22 billion of ‘de-risked’ revenue for the coming decades, Melrose said at the time.
Melrose was also placed on “positive catalyst watch” ahead of full-year results next March, through which JPM said it was expected to provide new medium-term guidance.