The sell-off suggests the market was looking for upgrades to support the current valuation – based on Investec's 2013 earnings per share forecast of 29.7p the stock is on a price/earnings ratio of 16. The Wiltshire-based group, which also makes products for the dairy industry, is a Shares Tip for 2013 and has enjoyed a largely stellar 2013 – up 29.4% year-to-date.
Today's interim management statement, covering 1 April to 15 August, comes ahead of results (published 20 Nov) for the 12 months to 30 September 2013. It indicates that continuing strength in the protection business, providing masks and filters to the military, security agencies and emergency services, is outweighing weakness in its dairy division where falling milk prices and higher feed costs are a drag on performance.
Net debt ticked up from the September 2012 year-end level of £8.7 million to £11.4 million as at the end of June. The group's purchase of a building in Mississippi and acquisition of Poole-headquartered VR Technology in a May adding a combined £3 million to borrowings.
In response to today's update, Investec analyst Andrew Gollan switched his advice from 'add' to 'hold', upping the price target from 470p to 500p. He says: 'The outlook is solid although order book cover going into September 2014 is likely to be lower than the prior year due to US contract phasing.'
A report from research house Edison was slightly more bullish citing: 'upside potential' from 'new product and service introductions' next year.