Panmure Liberum sees around 20% upside in Smiths Group (LSE:SMIN) after the engineering group completed the £2bn sale of Smiths Detection and lined up a fresh £1.5bn buyback.
The stockbroker repeated a Buy rating and 3,070p target price (current price: 2,560p), with the pitch being that the streamlined continuing business remains undervalued.
Smiths sold Detection to CVC at 16.3 multiple of headline operating profit (12.5x headline EBITDA), generating more than £1.9bn of net cash proceeds, ahead of previous guidance of £1.85bn.
Together with the Smiths Interconnect disposal, the broker noted that the transactions represent £3.3bn of combined enterprise value, which Panmure said underscored management’s execution on the separation plan.
The £1.5bn buyback is expected to be substantially completed in calendar 2027, following the current £1bn programme. Panmure lifted FY27 and FY28 fully diluted EPS forecasts by 4% and 23%, respectively, to reflect the lower share count.
