JPMorgan downgrades Electrocomponents after strong run
JPMorgan Cazenove downgraded its rating on shares of Electrocomponents to ‘neutral’ from ‘overweight’ on Thursday and cut the price target to 746p from 811p, mainly on valuation grounds following a strong recent share price performance.
JPM noted that since mid-January, the shares have been flat versus the FTSE 250 down 18%.
It said the company’s FY20 results were solid, with pre-tax profit of £215m, at the upper end of consensus versus guidance for the lower end. It also said the company has seen an encouraging start to FY21.
"However, at circa 18x recovered earnings, we’d prefer to look elsewhere or wait for a cheaper entry point," the bank said.
It now forecasts FY21 pre-tax profit of £162m, with an 8.4% organic revenue decline, and has reduced its FY21 forecasts by around 30%.