Berenberg raises target price on XP Power
Analysts at Berenberg raised their target price on XP Power from 5,500.0p to 5,945.0p on Wednesday following the group's "impressive" 2020 performance.
Berenberg highlighted that XP Power had delivered organic revenue growth of 17% year-on-year, operating margins of 19.7%, up 220bp, strong cash generation, 98% conversion, and adjusted pre-tax profits 4% ahead of market expectations.
While the analysts acknowledged that £15.0m-20.0m of Covid-19 related healthcare orders were not expected to repeat in 2021, they said the company was still well placed to benefit from a cyclical recovery in industrial technology alongside continued momentum in semiconductors.
"We believe XPP deserves credit for its execution through a difficult period and we continue to see significant short and long-term tailwinds for the company," said Berenberg, which reiterated its 'buy' rating on the stock.
The German bank added that in the medium to long term, it believes earnings can double in five years through structural growth in XP's end-markets and market share gains.