Panmure Liberum has started covering Intertek Group PLC (LSE:ITRK) with a 'buy' rating and a target price of 5,579p.
The analysts argue the company is one of the strongest performers in the testing and inspection industry, thanks to its focus on profitability and cash generation.
Intertek makes its money by testing and certifying everything from consumer goods to industrial equipment, helping clients meet safety, quality and regulatory standards.
The group has consistently delivered industry-leading profit margins (the proportion of revenue left after costs), as well as strong returns on invested capital (a measure of how efficiently it turns investment into profit).
One criticism has been slower organic revenue growth (sales generated without acquisitions).
This has partly been due to weaker spending from oil and gas clients in the past, and the disruption caused by Covid.
But Panmure says management is rightly prioritising profitability over chasing growth for its own sake.
Looking ahead, the broker believes Intertek can still hit its 18.5% margin target, helped by growth in divisions such as Electrical and Connected World and Business Assurance.
These areas benefit from long-term trends like more complex supply chains, stricter regulation, and increasing consumer choice.
On valuation, the shares trade on a price-to-earnings ratio (P/E) of 16.8 times expected 2026 profits, which is slightly below rivals.
Panmure thinks that undervalues the company’s quality of earnings and relatively low debt.
The shares were up 24p at 4,678p.