- Spirax Group
- 14 February 2025 08:19:30
Source: Sharecast
The broker said that some structural threats, such as the impact of generative AI and lengthening replacement cycles, may be underestimated by investors.
It also said there are no clear catalysts for upgrades or a share price outperformance over the next 12 months.
"Clear evidence of improvements in the ETS division may not be seen until FY26F, whilst global industrial production growth forecasts for FY25F indicate limited risk to the upside for forecasts, in our view," it said.
The broker said that while a premium rating has previously been justified by the company’s long-term earnings record - as opposed to IP or products with unique capabilities - recent trading and margin guidance has disappointed investors.
Shore said the FY25F PER of 26x (16x EV/EBITDA) appears stretched given the five-year earnings per share compound annual growth rate of 1.6%.
"The company’s five-year EPS CAGR to FY24F is 1.6% with FY24F EPS consensus being downgraded by 34% cumulatively over the past two years with similar percentage downgrades to FY25F," it said.
At 0815 GMT, the shares were down 0.6% at 7,840p.