Halma PLC (LSE:HLMA) shares fell despite the health and safety technology giant’s interim results coming in ahead of forecasts.
First-half revenues of £875.5mln were up 19% on a reported basis or 9% organic at constant currency, with growth in all sectors and regions, around 5% ahead of the City analyst consensus.
Adjusted operating profit of £177.9mln was up 12% year on year, with adjusted PBT up 11% to £171.7mlnm.
The outlook remains confident, based on a strong order book, with order intake ahead of revenue and up on a year ago.
Broker Peel Hunt said: “This reflects strong underlying demand, but there is also an element of customers making strategic investments in their own inventory, which we expect to unwind at some point.”
On forecasts, the broker said it was making no material change to underlying assumptions, but factoring in the currency tailwind it expects to move its adjusted PBT estimate from £344.7m to closer to £360mln.
“We maintain our ‘hold’ rating. The outlook remains positive given the structural demand in Halma’s end markets, the agility of the businesses (illustrated by the group’s impressive historic track record) and the strength of the balance sheet, which should support further M&A. The premium rating is deserved, in our view, but fairly reflects the outlook, and with the change in management team also underway we maintain our Hold recommendation.”
Fellow broker Shore Capital forecast that Halma will double its earnings in five years, in other wordsa grow at 15% compound annual growth, split between organic and acquisitive growth.
It sees a fair value range of 2,510p-2,920p, with the average of 2,715p implying c.15% upside on the average fair value, leading it to retain a ‘buy’ recommendation.