Long-term trends, such as the increased electrification of industrial applications as a result of carbon emission targets, are working in components specialist discoverIE’s favour, suggests Shore Capital.
The FTSE 250 group is also better placed than most industrial peers at passing on any increased costs to consumers as a result of inflationary pressures.
This is due to the customised and bespoke nature of its solutions, and the fact that its products are usually a “small portion of a customers’ budget.”
ShoreCap was following up the award by MSCI ESG Research of an “A” Rating for discoverIE, having achieved the highest scoring range in the Opportunities in Clean Tech and Corporate Governance categories.
The broker noted the current share rating remains at a “sizeable premium to peers,” even though they have fallen 24% so far this year, largely due to a sell-off in the electronics sub-sector and macroeconomic uncertainty caused by the war in Ukraine.
There is a risk for shares to derate further as tensions in Ukraine show no sign of slowing down and push up input prices even more, but 'hold' remains the investment view with a target price of 980p.