On Monday, Deutsche Bank (ETR:DBKGn) adjusted its financial outlook on Spectris Plc (LON:SXS:LN) (OTC: SEPJF), reducing the price target to GBP28.50 from GBP28.80, while reaffirming a Hold rating on the stock. The modification follows the company's third-quarter update, which saw a decline in Spectris' full-year guidance, falling 11% below the consensus and 5% below the lower end of the previously established range.
The analyst from Deutsche Bank noted that despite the cut in full-year guidance, the market's reaction was relatively muted, with Spectris shares experiencing a modest 2.3% drop on the day of the announcement. This response was attributed to low expectations ahead of the quarterly update. As a result of the revised guidance, Deutsche Bank has reduced its earnings per share (EPS) estimates for Spectris by 12% for 2024 and 14% for 2025.
The report also highlighted that the current situation at Spectris does not decisively indicate a 'clear the decks' moment for the company. The analyst anticipates that organic constant currency (OCC) sales growth will be modest at 2.8% year-over-year in 2025, with expectations of a stronger second half of the year.
Spectris is undergoing significant corporate activity, including management changes, the integration of two businesses with a third expected soon, and the pursuit of substantial synergies. Additionally, the company is implementing a new ERP system and undertaking a comprehensive restructuring program. These initiatives are being carried out with the aim of positioning the business for recovery.
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