Renishaw PLC (LON:RSW) investors got a two-for-one on Wednesday as the healthcare technology group was upgraded by analysts at Numis on the back of a bullish trading update.
The FTSE 250-company posted a 12% rise in revenues to £429.9mln in the nine months ended March 31 (March 31 2017: £384.3mln), boosted by a strong performance in its metrology division, which makes precision measurement devices such as Renishaw’s co-ordinate measuring machines.
Full-year guidance raised
Adjusted profit before tax was almost 40% ahead of the same period last year at £97.6mln (March 31 2017: £70.1mln).
Renishaw noted the current “economic uncertainties” but said it was still confident in its future prospects.
As a result, the company hiked its full-year expectations and is now guiding for revenue of between £585mln and £610mln, and adjusted profit before tax in the range of £145mln to £160mln.
Back in January in its interim results, Renishaw forecast revenues of between £575mln to £605mln and adjusted pre-tax profit to be in the range of £127mln to £147mln.
Numis lifts 2018 and 2019 forecasts
Numis analyst David Larkam heaped praise on the “high quality technology business” as he moved to ‘buy’ from ‘hold’ on the stock.
“[Renishaw is] difficult to value, but market position and technology leadership undoubtedly demand a premium,” Larkam wrote in a note to clients.
“A price-to-earnings ratio of 30x is certainly not demanding and on 2019 numbers suggests a 12-month target of over £54.”
Given the company’s internal guidance upgrade, Larkam has followed suit. He has now pencilled in pre-tax profits of £146mln (from £140mln) and earnings per share of 169p (from 161p) for the current financial year.
The analyst has always nudged up his estimates for the next financial year. He is expecting pre-tax profits of £157mln (prev. £150mln) in 2019 and earnings per share of 181p (prev. 172p).
Full-year results for the year ending June 30 are due out on July 26.
Renishaw shares climbed 11% to £52.60 in late-morning trade on Wednesday.