Shares in Tristel Tristel PLC (AIM:TSTL) have been downgraded from 'buy' to 'Hhold' by Deutsche Bank, citing a strong recent run in the share price that leaves the stock fairly valued.
It analysts adjusted their recommendation after Tristel's shares surged by 53% in less than three months. There has been no obvious tailwind, such as significant upgrades to market consensus estimates, the also noted.
This rally has largely confirmed Deutsche Bank's earlier view that the shares were previously undervalued.
Tristel, which specialises in infection prevention products, now trades at a mid-teen enterprise multiple and around a 4% free cash flow yield, returning to its historic valuation range.
According to Deutsche's team, this valuation seems fair given that investors still await evidence of a successful US expansion and a return of the company's core business to double-digit growth.
The bank has slightly increased its target price from 385p to 400p, reflecting a roll-forward in valuation, but made no meaningful changes to its earnings forecasts.
Its analysts now see a more balanced risk-reward scenario ahead of the company's upcoming trading update and Capital Markets Day scheduled for 29 July.
The shares were up 1% at 419.68p.
Tristel’s shares closed at 415p, slightly above Deutsche Bank’s updated target.