On Monday, RBC Capital Markets adjusted its stance on Intertek Group Plc (LSE:LON:ITRK) (OTC:IKTSY), a quality assurance provider, by increasing the stock price target to GBP52.00 from GBP47.00. The firm continues to endorse the stock with an Outperform rating.
The revision follows Intertek's recent announcement of full-year 2023 earnings, which aligned with expectations. In response, RBC Capital made minor adjustments to the company's near-term earnings per share (EPS) estimates.
The raised stock price target is primarily due to a 0.25% decrease in the Weighted Average Cost of Capital (WACC) within RBC's Discounted Cash Flow (DCF) model. This change reflects a perception of reduced risk for Intertek, particularly after the company navigated through a challenging period following the end of lockdowns.
RBC Capital cites Intertek's improved capital discipline, especially regarding mergers and acquisitions, as a factor in the revised valuation. The firm believes that Intertek is managing its resources more efficiently, which could potentially lead to better financial performance.
The analyst also notes that Intertek's stock offers relatively good value compared to other companies in the defensive growth sector. This suggests that, despite market uncertainties, Intertek is considered a stable investment with the potential for consistent growth.
Intertek's commitment to maintaining tight capital discipline and its positioning as a value proposition among its peers are key reasons RBC Capital has maintained its positive outlook on the company's shares.
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