Engineer IMI (IMI) proposes to buy industrial valve maker Bopp & Reuther (B&R) for €152.6 million (£121 million), a deal announced alongside a lukewarm trading update through the third quarter. The news leaves the market and analysts divided on the engineer’s prospects with shares trading at £12.33, down 0.5%.
Analysts at Liberum are pretty keen on the stock, maintaining a ‘buy’ rating and sticking to a target price target of £16.50. They say it is no great surprise revenue growth moderated in the four months to the end of October - to 1% from 3% in the first half. IMI’s purchase of B&R is likely to be earnings accretive next year, they add.
At Numis, analysts are more cautious, flagging the stock’s price-to-prospective-earnings ratio of circa 15-times. They say that this is ‘reasonable value for a high margin engineer but also high enough in a world where growth is becoming more difficult to find’. Numis has a ‘hold’ rating on the stock and a £13.00 price target.
Management previously warned of margin pressure ahead of IMI’s first quarter statement in May.
