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On Monday, RBC Capital Markets changed its position on Intertek Group Plc (LSE:LON:) (OTC:IKTSY), a quality assurance services provider, raising its share price target to GBP52.00 from GBP47, 00. The company continues to support the stock with an Outperform rating.
The revision follows Intertek’s recent announcement of full-year 2023 earnings, which were in line with expectations. In response, RBC Capital made slight changes to the company’s near-term earnings per share (EPS) estimates.
The increase in share price target is primarily due to a 0.25% decrease in the weighted average cost of capital (WACC) within RBC’s Discounted Cash Flow (DCF) model. This change reflects the perception of reduced risk for Intertek, particularly after the company went through a difficult period following the end of lockdowns.
RBC Capital cites Intertek’s improved capital discipline, particularly around mergers and acquisitions, as a factor in the rating review. The company believes that Intertek is managing its resources more efficiently, which could potentially lead to better financial performance.
The analyst also notes that Intertek shares offer relatively good value compared to other companies in the growing defensive sector. This suggests that despite market uncertainties, Intertek is considered a stable investment with the potential for steady growth.
Intertek’s commitment to maintaining strict capital discipline and its positioning as a value proposition among its competitors are the main reasons why RBC Capital has maintained its positive outlook on the company’s shares.
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