JPMorgan upgrades Intertek to 'overweight', expects H2 improvement

JPMorgan Cazenove has upgraded its rating for Intertek from 'neutral' to 'overweight', saying that the product testing group has reached an inflexion point for organic growth.The bank said that Intertek's shares are "still quite highly rated" - trading at 17.5 times forward earnings - at a 29% premium to the FTSE 100, though this is the stock's lowest premium to the index since February 2010.Intertek reported that organic revenue declined by 0.5% in the first half of 2014, which implies a 2% decline in May and June following 0.3% growth in the first four months of the year."However, management said that May has been the worst month of the six months and then June was better," JPMorgan said. The company said it expects organic revenue growth of 2-3% in the second half.The bank said: "Some of the impacts from [the first half], such as the Indonesia export ban, will continue through the second half, but Intertek will benefit from the annualisation of the Saudi contract, the commencement of some of the pipeline contracts and an easier comparable in the Consumer business."JPMorgan left its target price for the shares at 3,033p.Intertek's stock was up 3.1% at 2,788.52p by 11:21 on Tuesday.BC