- Valuation discount seen as overdone despite tariff and short-cycle headwinds
Shares in discoverIE Group PLC (LSE:DSCV) climbed 3.5% in early afternoon trading on Tuesday after RBC Capital Markets upgraded the electronics group to Outperform, arguing that recent underperformance and tariff-related concerns are already reflected in the valuation.
The broker flagged that discoverIE’s shares are now trading at roughly a 30 per cent discount to their long-term average price-to-earnings ratio. That puts the stock more in line with UK industrial peers, despite what RBC sees as stronger medium-term growth prospects and a solid pipeline for bolt-on acquisitions.
While the group is exposed to US tariffs and short-cycle demand volatility, RBC believes these risks are now sufficiently priced in. The shares have underperformed by 12 per cent over the past three months, but analysts still expect discoverIE to grow faster than the sector organically over the medium term.
The bank trimmed its price target to 600p from 690p but said the risk-reward profile now supports a more positive stance.
The shares were up 18p at 533p.