Numis Securities has hiked its stance on Electrocomponents PLC (LON:ECM) following the electronics distributor’s bullish trading update today, after raising its estimates and target price.
In a note to clients, the broker’s analysts upgraded their rating to ‘add’ from ‘hold’ with an increased target price of 660p, up from 630p, having raised its earnings per share forecasts by 5% for 2018 to 2020.
READ: Electrocomponents makes strong start to year, with acceleration in revenue growth, improved profits
They said: “Electrocomponents' strong 1Q18 SPD growth performance (+13% vs +8.1% in 4Q17 and +0.9% in 1Q17) provides growing evidence that initiatives to improve customer service, sales effectiveness, and leverage its digital offering are enabling it to win market share. “
The analysts added: “With an improving drop-through rate, we now forecast an operating margin in FY18 of 9.5% (previously 9.3% and vs 8.8% in FY17).”
In a trading update for its first quarter ended 30 June, the FTSE 250-listed firm said today that its underlying revenue growth was up 13%, with all regions seeing double-digit underlying revenue growth.