Sharecast - Berenberg said Essentra's recent full-year results offered "a clean picture" of the company in its new form as a standalone components business.
"The components division recorded 12% revenue growth year-on-year (circa 6.5% organic, circa 3% mergers and acquisition, and circa 2.5% foreign exchange) with earnings before interest and tax margins of 18.9%, demonstrating an ability to protect profitability and drive growth despite a challenging macroeconomic backdrop," said Berenberg.
From here, the German bank stated the story was "compelling", with cash disposal proceeds set to be used to restructure the group, invest in a new enterprise resource planning system to drive growth, mergers and acquisitions, and £150.0m of shareholder capital returns.
"A medium-term ambition to triple operating profits offers attractive shareholder returns, if successful. We move our price target to 255.0p (from 295.0p) to reflect updated forecasts and peer valuations," said the analysts, who stood by their 'buy' rating on the stock.
Reporting by Iain Gilbert at Sharecast.com