Halma PLC's (LSE:HLMA) sharp post-results sell-off has created the “entry point” investors had been waiting for, according to UBS, which reiterated its Buy rating and 4,775p price target on the safety, healthcare and industrial technology group.
The Swiss bank said the shares’ 15% fall after the company’s FY26 results and FY27 guidance looked like “a pure derating” rather than a deterioration in the investment case. Its target implies 21.56% upside from a share price of 3,928p.
UBS said expectations around Halma’s Photonics division had been “firmly normalised”, while Citi, which also upgraded the stock to Buy after the share price decline, said the shares no longer appeared to carry a “photonics premium”.
That matters because Photonics has become the key debate around Halma. Citi said the new disclosure gave investors a clearer view of the product offering but stopped short of additional financial detail. The real issue, it said, was growth expectations, with some at the upper end of the market hoping for FY27 Photonics growth of 50% to 60%, far ahead of management guidance for more than 30%.
Citi believes there is “a reasonable chance” that the outlook is upgraded in November. More importantly, its reverse DCF analysis suggests the market is now pricing in significantly less than a 20% mid-term CAGR for Photonics, leaving the risk to that estimate “clearly to the upside”.
