Broker tips: Intertek, Impax, Hays

(Sharecast News) - Shore Capital has upgraded its rating on Intertek from 'sell' to 'hold' following a big fall in the share price of the testing services firm over the past month. As of Monday's close, shares had fallen around 20% since the release of Intertek's full-year results on 4 March, with the selling pressure intensifying over the past few days following the announcement of Donald Trump's sweeping trade tariffs.

"FY24A results were solid in our view, with our 'sell' recommendation reflecting our view of fair value and that future competition and margin sensitivities were not reflected," said analyst Robin Speakman.

"With the recent pull-back, we assess the immediate likely economic impacts on Intertek and reduce our forecasts. Our fair value falls from 4,600p to 4,500p, equating to 5% upside to the current share price."

Speakman said that Intertek - like all of its peers in the assurance, testing, inspection and certification (ATIC) sector - is "at the forefront of trade", with headwinds likely to remain a challenge across 2025 and into 2026.

"Beyond the medium-term, however, trade rules and compliance requirements will become re-established (likely stronger and more complex bilaterally), and this is likely to provide opportunities to our minds [...] ATIC service provision remains essential to the functioning of economies, and we continue to regard Intertek's operations accordingly in the long-term," the analyst said.

Analysts at Berenberg lowered their target price on asset manager Impax from 440.0p to 330.0p on Tuesday as it said the group was now "navigating an uncertain market backdrop".

Impax published its Q225 update on Tuesday, revealing that assets under management had decreased by roughly 26% over the period, driven by both net outflows and negative market movements.

Berenberg noted that management highlighted that it anticipates FY25 profits to be below market expectations, with market conditions highly uncertain in H2 2025, given the impact of an escalating trade war.

However, Impax also closed its acquisition of the European assets of SKY Harbor Capital Management, which should add around £1.1bn in assets under management.

"The SKY Harbor team brings new investment capabilities to Impax, including US and global short-duration high-yield credit strategies. This is part of Impax's broader focus on diversifying its offering and distribution channels, which we think will provide the business with more resilience and growth opportunities in the medium to long term," said the German bank.

Berenberg updated its forecasts, with its FY25 earnings per share estimate reducing by approximately 12% and outer years by around 19-28%, driven by factoring in Q225 figures and a decrease in its net flow expectations.

"We expect the company to continue to target a c30% adjusted PBT margin (although we forecast that it will drop below this target in FY 2025 and FY 2026 (to c25%)," it added.

Morgan Stanley upgraded its stance on Hays on Tuesday as it took a look at the European staffing sector and the potential impact of tariffs.

The bank lifted Hays to 'equalweight' and trimmed the price target to 66p from 68p.

Morgan Stanley previously had an 'underweight' rating on the shares as it saw risk from Hays' large exposure to Germany combined with a weaker balance sheet and higher likelihood of a dividend cut.

"While these risks remain, we think they are now better reflected in the valuation, and our price target implies limited further downside," it said. "We therefore neutralise our rating."