RBC Capital upgrades Electrocomponents to 'outperform'

RBC Capital Markets upgraded Electrocomponents on Tuesday to ‘outperform’ from ‘sector perform’ and hiked the price target to 1,350p from 1,070p as it said the company will be a long-term winner.

"We have been fans of ECM for a while and believe the pandemic has further strengthened its competitive advantage given its digital and web capability, stock availability and omni-channel superior service proposition," RBC said.

"We see strong potential for further market share gains, believe mid-teen margins are achievable from a number of levers (and now factor this in by 2026) and see further M&A as an incremental value driver."

RBC said its medium-term forecast increases drive the uplift in the target price.