On Friday, HSBC raised the investment rating for Spirax Group PLC (LON:SPX:LN) (OTC: SPXSY) stock, moving from Hold to Buy, while also increasing the price target to £80.00 from £77.00. The revision reflects a positive shift in the company's prospects, as indicated by the end of a period marked by downward earnings revisions.
Klepp highlighted that the stock's performance over the last three years, combined with a halt to earnings downgrades, might renew investor interest in Spirax. The analyst pointed out that despite consensus estimates being around 6% higher than their own, HSBC has not reduced its estimates for the company.
The new price target of 8,000p, up from 7,700p, is based on a roll-forward of the sum-of-the-parts (SOTP) valuation to 2025 estimates and an update of peer multiples. This adjustment suggests a substantial 25.6% upside potential for Spirax shares, prompting the upgrade to a Buy rating.
Klepp expressed optimism for Spirax's future, noting that the company is positioned to experience more significant growth moving forward. With lower comparative figures through 2025, Spirax is anticipated to embark on a trajectory of pronounced growth.
The positive reassessment by HSBC arrives after a prolonged period of unfavorable news, with the expectation that the risk/reward balance is now leaning towards a positive upside for the company.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.