discoverIE Group PLC's (LSE:DSCV) focus on the structurally growing markets has continued to support strong growth, house broker finnCap said.
The broker noted that full-year results from the group announced today provided evidence that it is able to pass on cost increases to its customers and manage supply chain issues, with the operating margin rising to 10.9% from 10.2% the year before.
“discoverIE’s components are essential to customer projects but generally only represent a small part of the total cost – a very good position to be in given the current macro pressures,” the broker opined.
With like-for-like orders up 36% year on year, finnCap said it thinks the group is very well positioned to continue to grow and following the release of the full-year results the broker has upgraded its earnings per share forecast for the current financial year by 2.5%.
The target price remains unchanged at 1,220p, compared to a current price of 714p – up 4.7% on the day.
“We set our target price prior to the H2 disposal and have left it unchanged, reflecting our view that the proceeds will be reinvested, more than offsetting the short-term dilution. The shares have been de-rated as macro worries over inflation and supply chain issues have come to the fore. Today’s results evidence discoverIE is performing very well against these macro headwinds and the long-term growth prospects remain undiminished,” the broker concluded.