(Sharecast News) - Electrocomponents rallied on Tuesday as JPMorgan Cazenove upped the stock to 'overweight' from 'neutral' and hiked the price target to 1,103p from 799p, arguing that it's a "great" company with an "OK" valuation.
JPM noted that trading in the third quarter bounced back quicker than anticipated, with 8% group like-for-like growth, versus a 4% decline in the second quarter.
"This will be offset by higher freight and other costs in the short-term; however, we regard these as temporary, whereas the market share gains are likely permanent," JPM said.
"Longer-term, the combination of its digital offering in a post-Covid world (circa 62% of revenues), and an emerging M&A strategy, with 3-4x the number of active M&A opportunities versus two years ago, means we can see the stock re-rating towards circa 30x price-to-earnings."
This compares to c21x FY2 P/E currently.
At 1040 GMT, the shares were up 3.8% at 979p.
3 May 2022 16:41
IN BRIEF: Electrocomponents name change to RS Group confirmed
Electrocomponents PLC - London-based industrial and electronic products distributor - Changes its name to RS Group PLC. The company previously announced its intention to change name on March 30. Adds its ISIN will remain unchanged and the change of name will not affect any shareholder rights.
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