Source: Sharecast
Johnson Service Group released what Berenberg called "a reassuring FY25 trading update" on 16 January, which in its view, "attested to the company's resilience", especially in the context of the subdued UK economic/consumer backdrop.
Berenberg highlighted an acceleration in JSG's Workwear unit's growth and further improvement in the firm's underlying earnings margin as standouts of the update.
The German bank also noted that while JSG's organic revenue growth was currently "more modest than recent years", it noted that the business continues to grow adjusted EBIT at double-digit rates, reflected in rising profit margins.
Combined with recent share buyback activity, Berenberg expects JSG to deliver earnings per share growth at rates of 18-21% over FY25- 26.
"Despite this strong earnings growth, its shares have yet to show any material momentum, rising by only 4.9% ytd and at below average multiples," said Berenberg, which has a 'buy' rating on the stock.
"In our view, JSG provides strong growth at very reasonable price. We move our valuation considerations forward a year, upwardly revising our price target by 5% to 205p (44% upside), still only equating to 14.3x FY26 earnings."
Reporting by Iain Gilbert at Sharecast.com