On Wednesday, BofA Securities adjusted its stance on RS Group (LON:RS1R) Plc (RS1:LN) stock, movingthe rating from an Underperform to a Neutral rating. The firm also set a price target for the stock at £7.30, a slight decrease from the previous target of £7.50.
The revision comes after observing RS Group's performance during the COVID-19 pandemic, where revenue and EBITA were significantly impacted by supply chain disruptions. As the market conditions have begun to normalize, the previously seen over-earnings have started to unwind, prompting the change in rating.
The analyst from BofA Securities noted that the easing of momentum in Purchasing Managers' Indexes (PMIs) has affected the stock's performance. However, the current valuation of RS Group now aligns with the sector average and historical norms. This realignment has been a key factor in the revised rating.
Furthermore, the consensus expectations for RS Group are now believed to be in line with the current demand landscape. The analyst also mentioned that the company's self-help measures are reflected in the consensus expectations, suggesting a balanced view of the company's prospects.
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