Rosebank Industries PLC (AIM:ROSE), the industrial turnaround vehicle run by former Melrose executives, has attracted 'buy' ratings from both Jefferies and Citi as the two banks resume coverage following the completion of its acquisitions of MW Components and CPM, transforming the company from a single-asset story into a group of three US industrial businesses.
Jefferies reinstated coverage with a buy rating and 470p target price, implying 35% upside from the current share price of 347p, while Citi resumed with a buy and a 450p target, both banks anchoring their cases on the margin improvement potential across the newly enlarged portfolio.
The twin acquisitions, totalling more than $3 billion, add MW Components, a manufacturer of engineered fasteners, springs and precision metal products, and CPM, a global supplier of process equipment and aftermarket solutions for food, feed and energy markets, to ECI, the electrical components business Rosebank acquired last year.
Combined, the three businesses give Rosebank pro-forma revenues of approximately $2.4 billion, roughly double its previous scale.
The investment case in both notes rests on the management team's track record at Melrose, where previous turnarounds delivered a median margin improvement of more than 50% and an average return on equity of 2.5 times across deals, including McKechnie, FKI, Elster and Nortek.
Jefferies is targeting 6-7 percentage points of EBIT margin expansion at both MW and CPM, taking MW from 15% towards 21-22% and CPM from 22% towards 28-29%, through footprint rationalisation, restructuring of underperforming sites and a shift towards higher-margin business segments.
Citi targets 600-700 basis points of margin improvement in both cases, and frames the overall ambition as doubling shareholder investment from the recent £1.9 billion equity raise over a three-to-five year holding period.
Both banks note that early execution at ECI, where margins are already progressing despite a mixed end-market backdrop, provides confidence in management's ability to deliver across the wider portfolio.
Jefferies forecasts group EBIT margins rising from 16.1% in the financial year 2026 to 19.6% by 2028.
In late morning trading, the shares were up 4% at 359p.