Redburn has upgraded its stance for Intertek Group PLC (LON:ITRK) to ‘buy’ from ‘neutral’ as it said global trade war fears provides an opportune moment to invest into what it sees as a shift in the industrial space.
In a note to clients, the broker's analysts said, in their view, the FTSE 100-listed industry testing and inspection certification provider was also best placed to benefit from new marine emissions regulations from the International Marine Organisation (IMO).
READ: Intertek's share price slide moves it into fair value territory
They said: “With what is swiftly becoming the best balance sheet in the sub-sector and a P/E rating that has retreated c20% from its 2017 high, we believe the fears around trade wars provide an opportune moment to buy into a long-term, underappreciated structural shift in the industrial space."
The analysts added: “Intertek has the greatest revenue and EBITA exposure to IMO 2020’s derivative benefits, which leads us to upgrade our EPS estimates by 5-10% in 2020 and 2021.
"Our estimates are c8-10% ahead of an emerging long-term consensus and a combined sum of the parts and DCF points to 22% upside on a 12-month view."
Intertek shares were up 1.3% at 4,784p in lunchtime trading on Wednesday.