FTSE 100 safety products firm Halma PLC (LON:HLMA) has been downgraded to ‘hold’ from ‘buy’ by City broker Shore Capital on valuation grounds, however, analysts highlighted long-term growth drivers from a global increase in safety regulation and environmental policies.
In a note to clients, the broker said increased regulations, tighter environmental policies, and an ageing population were all drivers toward “future success of the company”, adding that an 86% average adjusted cash conversion was “a good base for further growth” through innovation and international expansion into developing countries.
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“We continue to believe Halma is a great quality company and is in a good position considering it is well placed to benefit from recent capital investment to support growth,” the broker said.
In a trading update at the end of September, Halma reported that from 1 April to date order intake had been ahead of the same period last year, with all sectors delivering organic constant currency revenue and profit growth.
The company added that its US market had grown strongly in the period, with its Medical, Environmental & Analysis, Process Safety, and Infrastructure Safety divisions performing well.
Despite the downgrade, Shore Capital retained its 1,436p price target on the stock and left its forecasts unchanged.
In late-morning trading Monday, shares were down 2.8% at 1,395p.