Morgan Stanley analyst Max Yates has maintained their neutral stance on HLMA stock, giving a Hold rating yesterday.
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Max Yates has given his Hold rating due to a combination of factors surrounding Halma plc’s recent acquisition of E2S. The acquisition, valued at £230 million, is Halma’s largest to date and is expected to contribute positively to the company’s financials, with an estimated 2% increase in revenues and 3% in EBIT by fiscal year 2027. Despite the positive financial outlook, the acquisition will increase Halma’s net debt to EBITDA ratio to 0.75x by the end of fiscal 2026, which still leaves room for future mergers and acquisitions.
While the acquisition of E2S is strategically aligned with Halma’s existing portfolio, particularly in the safety sector, and offers attractive growth and margin prospects, the decision to rate the stock as Hold may reflect a cautious stance on the integration process and the potential risks associated with such a significant acquisition. The valuation multiples paid for E2S are considered attractive, given its high growth and strong EBIT margins, yet the market may be waiting to see how effectively Halma can leverage these assets to drive long-term value creation.
In another report released yesterday, J.P. Morgan also reiterated a Hold rating on the stock with a p3,900.00 price target.
Based on the recent corporate insider activity of 28 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HLMA in relation to earlier this year.