Shares in discoverIE Group PLC (LSE:DSCV) surged 18% after the custom electronics specialist reported resilient first-half results, despite industry challenges.
Chief executive Nick Jefferies attributed the performance to the company’s flexible operating model, which helped offset lower sales caused by industry de-stocking.
Operating margins rose to a record 13.8%, keeping the company on track to hit its 15% target.
Underlying profits increased by 4% at constant currencies to £29.1 million, even as revenues fell 5% to £211.1 million for the six months ending 30 September, largely the result of de-stocking by customers.
Cash flow generation was another highlight, jumping 46% to £45 million, enabling potential acquisitions worth £70 million in the second half.
Supported by a £163 million order book, discoverIE reaffirmed its full-year earnings guidance, with third-quarter trading performing as expected.
"With order and revenue trends starting to recover (gradually and patchily) and good progress operationally, discoverIE expects to hit (full-year) consensus expectations," said Stifel, reiterating its 'buy' recommendation.
"In difficult markets, with de-stocking having taken longer than initially expected to clear, we view this as a strong performance."
The American investment bank reckons the shares are worth 975p each, while Jefferies' price target is a more conservative 705p.
In late morning trading, the stock was changing hands for 744p, up 111p.