discoverIE Group PLC (LON:DSCV) has made a “high-margin, strategically relevant acquisition” with its purchase of sensing and data module maker Sens-Tech, according to analysts at Jefferies as they upgraded their target price on the firm to 540p from 500p.
In a note on Thursday, the US broker, which rates the custom electronics maker at ‘buy’, said the £58mln acquisition would provide “further growth opportunities in structurally attractive target markets” as well as increasing the diversity of its business model.
READ: DiscoverIE boosts margins with acquisition of sensor technologies company
Analysts also upgraded its earnings per share (EPS) estimates for the company for 2020, 2021 and 2022 by 3%, 5% and 5% respectively, to reflect both the Sens-Tech acquisition and a £33mln placing which was intended to reduce gearing following the purchase.
As a result of the new funds, Jefferies sees scope for over £40mln on the company’s balance sheet that could be used for more deals in the future.
The broker is now forecasting that discoverIE will deliver a pre-tax profit for its 2020 financial year of £33mln, up from previous estimates of £31mln, with revenues predicted to be £478.1mln compared to prior expectations of £471.2mln.
In late-morning trading, discoverIE shares were 0.2% higher at 466.9p.