Porvair PLC (LON:PRV) was downgraded to ‘hold’ from ‘buy’ by Shore Capital, which maintained its target price at 757p, due to a recent rise in the firm's share price combined with risk from economic uncertainty.
The filtration specialist's share price has rallied by 79% in the past year and is up 28% alone since its last update in December when it flagged earnings for the year would come in higher than expectations.
“We consider Porvair to be amongst the highest quality industrial stocks due to its ability to grow revenue (85% of which is recurring) and its ability to provide solutions to long-term environmental issues,” ShoreCap's analysts said in a note to clients.
“However, we think these factors are now fairly reflected in the price,” they added.
The analysts also upped their revenue and pre-tax profits forecasts for Porvair in 2019 by three percentage points, and now expect them to grow by 13% and 11% respectively.
“We consider our forecasts to be conservative, based on management’s track record of exceeding its 10% annual earnings per share growth target and the possibility of further large contracts, which have recurring revenue, causing a step change in earnings,” the ShoreCap analysts added.
In spite of the downgrade, Porvair shares advanced 2% to 772.8p on Friday morning. The firm is due to issue its preliminary full-year 2019 results on Monday, 3 February.