Goldman Sachs has initiated coverage of Halma PLC (LSE:HLMA) with a 'buy' rating and a 12-month price target of 3,740p, citing the UK industrial group’s ability to deliver consistent growth through thick and thin.
The shares rose 2% in afternoon trading following the note.
Describing Halma as a “consistent compounder,” Goldman said its long track record of growth, high returns and disciplined acquisition strategy gave it an edge, particularly in today’s more uncertain industrial environment.
“Our thesis is not one of change but consistency,” the analysts wrote.
“Over the last 20 years, Halma has grown its earnings at a 12% compound annual rate, supporting 6.6% annual dividend growth and a roughly 22 times increase in its share price.”
That kind of performance, they argue, is the result of a business model built on buying and developing niche, high-margin companies that serve structurally growing markets, from environmental monitoring to healthcare diagnostics and safety systems.
What sets Goldman’s forecasts apart is its inclusion of what it calls “generic M&A”, a modelling approach that bakes in ongoing acquisitions as a driver of future earnings.
This lifts its adjusted earnings forecasts for 2026, 2027 and 2028 to about 1%, 7% and 9% above consensus, respectively.
Halma has completed 94 acquisitions over the past two decades, spending around £2bn, all funded out of free cash flow.
The result, according to Goldman, has been an extra 3% added to annual sales growth and consistent returns on capital above 14%.
Despite its premium valuation, the bank sees further upside. The target price implies a forward multiple of 23.5 times enterprise value to EBIT, a 55% premium to the sector, though slightly below Halma’s 20-year average of 65%.
Goldman’s forecasts point to an 11.1% compound annual growth rate in earnings per share through to 2030.
“Halma’s current 32 times forward [earnings] multiple prices in around 8% earnings growth, well below its 20-year average and too conservative in our view,” the analysts said.
They expect that growth to be supported not only by acquisitions but also by exposure to high-growth sectors such as data centres, utilities and healthcare, as well as tighter environmental and safety regulations globally.
A decentralised structure, with local manufacturing close to end markets, also reduces exposure to tariffs and supply chain risks.
The result is a group that continues to reinvest steadily in innovation and expansion, with free cash flow margins forecast to exceed 16% and returns on invested capital among the most stable in the industrial sector.
The stock was up 66p at 3,298p on Thursday.