discoverIE Group PLC (LSE:DSCV) shares gained 3% to 611p after Deutsche Bank upgraded the stock from hold to buy and raised its price target from 735p to 850p.
Analyst James Beard said the company’s 20% fall this year made it an outlier in the UK electricals sector, noting that earnings forecasts had risen over the past 12 months even as the share price slipped.
He said the decline reflected slower organic revenue growth and a perception that the business is more exposed to economic cycles than before, with a quieter spell for acquisitions also limiting momentum.
But he argued that the market had overlooked the group’s earnings resilience.
He highlighted its long-term record of growing faster than the economy, steadily improving margins and delivering about a 15% pre-tax return on capital employed despite expanding the business through acquisitions.