Intertek offers strong structural growth through the cycle - Berenberg

Intertek's share price woes are overdone, believes Berenberg, upgrading the product testing, inspection and certification specialist to 'buy' from 'hold'.

Intertek’s share price has fallen more than 20% since hitting an all-time high of just over £60 in late July, since when it has agreed to shell out $480m to buy US-based 'people assurance solutions' provider Alchemy and reported a solid set of interim results.

Berenberg said the price fall "leaves investors with an attractive entry point into a well run business with attractive end-market exposure within the TIC industry".

The FTSE 100 company has one the highest exposures to process- and products-related services of 8% and 54% of EBITDA respectively in the industry and the lowest exposure to more cyclical asset-related services of 17%, Berenberg said, "making it a strong structural growth story to own through the cycle".

Analysts think the final two months of first half "marked the trough" in organic growth for Intertek of around 2.2%, and now expect growth to accelerate to 3.6% in the the third quarter and 4.6% in the fourth and on into 2019.

"As growth recovers and Intertek holds its premium margin/ROCE profile, the shares should re-rate and recent share price losses will be erased, in our view."