Source: Sharecast
Rotork announced on Thursday that it had agreed to be taken over by ABB, which will pay 506p per share in cash. This comprises 503p and a dividend of up to 3p. Deutsche said the offer "looks compelling".
"We've long argued the value within Rotork has been unrecognised, especially under Growth+ during which EPS has grown more than 50% and the shares have until today been negative under the CEO's tenure," DB said. "The recent relative underperformance on O&G concerns appeared unsustainable, particularly considering the relative decoupling of group EBIT to O&G declines."
Berenberg also cut its rating on Rotork from 'buy' to 'hold' on Frdiay but hiked its price target from 420p to 503p, stating the ABB takeover terms had effectively capped further upside for the shares.
Rotork agreed to a 506p per share acquisition by ABB, representing a 73% premium to its close price, with the board set to unanimously recommend the offer. Berenberg said the bid price, which equated to around 19x enterprise value/underlying earnings and 21x EV/EBIT, was highly attractive and, given ABB's strategic fit and synergy potential, left little realistic scope for a counter‑offer. With most of the value now crystallised, the broker moved its target price to sit in line with the bid level.
Berenberg noted that investor frustration over Rotork's growth profile, strategy and valuation had already prompted questions around potential activism or strategic interest, making the bid less surprising. Before the offer, Rotork traded on a roughly 16x 2026 price-to-ernings ratio and 12x EV/EBIT, reflecting Middle East headwinds and softer oil‑and‑gas investment.
The bid multiple, Berenberg said, highlights both the mispricing of Rotork and the broader undervaluation of high‑quality UK engineering assets with strong margins, pricing power and structural growth drivers. The German bank added that the deal provides a supportive read‑across for UK industrials.
Analysts at RBC Capital Markets cut their price target on Auto Trader from 830p to 535p on Friday, saying weaker prospects for average revenue per retailer in FY27 leave few catalysts for upside.
RBC Capital said it had updated its model after Auto Trader's FY26 results, downgrading estimates in line with consensus and keeping a 'sector perform' rating on the stock.
With FY27 pricing already set and the group's revised guidance in place, RBC sees limited scope for ARPR growth this year.
Looking ahead to FY28, RBC said pricing growth of 5% for FY27 was well below last year's roughly 8%, but a more stable cost backdrop for dealers and a more benign stock‑turn cycle could allow pricing to recover.
The Canadian bank noted that market dynamics remain challenging. While new‑car registrations rose 11.4% in June, the used‑car market continues to work against Auto Trader. Overall market turn held at 30 days, but EVs — the highest‑demand category — were reportedly selling a week faster than a year ago.
RBC cut its FY27 and outer‑year forecasts and now values the group at 10x FY27 underlying earnings, down from 16x previously after a sector de‑rating.