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Renishaw's rapid growth puts it on path for FTSE 100, Goldman Sachs says
Factory equipment manufacturer Renishaw is going to be the fastest growing company in European capital goods sector over the next three years and catapult itself into the FTSE 100, said Goldman Sachs as it initiated coverage on Wednesday.
Renishaw, whose devices and sensors are used in factory automation for highly accurate measurements of products and the calibration of machine tools, was given a 'buy' rating by based on Goldman's target price of 5,500p.
Analysts pointed out that the 50% sell-rated consensus and concerns associated with the firm's margin potential and valuation were "unwarranted".
Analyst Jack O'Brien argued that Renishaw's sector premium was, in fact, justified in light of Renishaw's speed of growth and potential as a M&A target.
O'Brien highlighted Renishaw's products' ability to increase factory production yields, improve time-to-market and enable the continuous manufacturing feedback loop as providing a major market opportunity in Asia, where China is actively trying to promote high value-add manufacturing. He said this was a key driver into what was seen as a £1.5bn market opportunity by 2020.
The analyst expects growth of 30% per year from the sector, with Renishaw likely to add scope for new products to unlock the mass-production market.