Melrose Industries PLC (LSE:MRO, OTC:MLSPF) succumbed to heightened expectations on Thursday as shares descended over 11% despite a seemingly strong set of results.
Though profit surged 42% to £540 million in 2024 to hit the high end of expectations on an 11% increase in revenue to £3.5 billion, analysts mulled over unchanged guidance.
This was for £700 million in adjusted operating profit over the coming year and an increase in free cash flow to at least £100 million.
The lack of a raise was the “only” issue, Stifel analysts said in response, as figures for the year just gone outdid forecasts.
“But, we think that is a function of industry supply chain constraints and is not unexpected,” Stifel added, as a ‘buy’ rating a 750p share price target were reiterated.
Longer-term targets for £600 million in free cash flow by 2029 on operating profit in excess of £1.2 billion did not disappoint also, analysts said.
“We think that the 2024 beat and long-term guidance are enough to support continuing upside in the shares, although the stock has run hard into the results, and the lack of an immediate raise to 2025 may be the one aspect [...] to cause minor disappointment.”
Shares were down 11.4% at 602.47p.