Berenberg lowers target price on Halma

Analysts at Berenberg lowered their target price on hazard detection technology group Halma from 1,860.0p to 1,710.0p on Tuesday, flagging some near-term concerns to clients even as they conceded that there were longer-term opportunities on offer.

Berenberg said Halma was one of the "highest-quality and best-run companies" in its coverage but stated that for the first time in a decade, its analysts saw meaningful downside risk to the company's earnings.

The German broker's new full-year 2021 earnings estimates put then 11% below the analyst consensus.

To arrive at its new estimates, Berenbeg had mapped out the locations of every Halma subsidiary to get a sense of "potential supply-side challenges", tracked Covid-19 statements on operating company websites and assessed numerous demand drivers.

"It is clear to us that Halma is by no means immune to the current backdrop. Hence with the shares down by just 7% this year and trading at 34x FY 2021 P/E, we think there is greater upside in some of the more cyclical names in the near term," said Berenberg.

The analysts said that to overlook the company's longer-term opportunity, strong balance sheet, potential dividend payout and environmental, social and governance credentials would be "an error".

Berenberg reiterated its 'hold' rating on Halma.