JPMorgan Cazenove gave a lift to shares in Diploma PLC (LON:DPLM) on Wednesday as the US bank initiated coverage of the mid-cap industrial products distributor with an ‘overweight’ rating and an M&A-model based target price of 1,678p.
In the same note to clients, JPMorgan’s analysts also started coverage of electrical components distributor Electrocomponents PLC (LON:ECM) with a ‘neutral’ rating and a historical/peer multiple-based target price of 591p.
READ: Diploma dips on caution over industrial seals slowdown
The bank’s analysts said: “We view both Diploma and Electrocomponents as being high-quality operators compared to most other distributors.”
However, they added: “On balance, we prefer Diploma given its M&A record, lack of cyclicality and consistency of results. This is reflected in the group’s FY1 P/E ratios with Diploma on 22.7x and Electrocomponents on 15.6x.”
In mid-morning trading, shares in Diploma were up 1.6% at 1,498p, while Electrocomponents shares shed 1.5% at 611.80p.