Bank of America has resumed coverage of Intertek with a 'buy' recommendation and a target price of 5,990 pence, which suggests around 25% upside potential for the British testing, inspection and certification group's stock.
The company has some of the best margins in the sector, strong cash conversion and accelerating return on invested capital (ROIC), the broker summarizes.
BofA also finds the stock's valuation "attractive," with Intertek trading at a 2026 P/E of 17.2x, compared with a 10-year average of 21.4x and a sector average of 17.8x.
Intertek Group plc is one of the world's leading groups specializing in analysis, control and certification of products and systems. Net sales break down by activity as follows:
- control and certification services for consumer goods (28,1%): textiles, footwear, toys, stationery, household appliances, consumer electronics, information and communication technology products, and products from the automotive, aerospace, lighting, construction, renewable energy and healthcare industries. Also, the group is developing an activity to monitor the certification of international standards;
- monitoring and assessment of petroleum and agricultural products (24.9%). Besides, Intertek Group plc offers inspection services to government system and regulators to support commercial activities, contributing to the movement of goods across borders ;
- cargo inspection, analytical evaluation, calibration and technical services to the oil and biofuels industries (22.3%);
- development of quality assurance solutions for the industry and infrastructures (14.6%): for the supply chain in the building and construction, renewable energies, oil and gas, petrochemicals, minerals and other industries;
- auditing and business process support services (9.9%): in the areas of science, regulation, environment, health, safety, and quality.
At the end of 2024, the group operated more than 1,000 inspection offices and laboratories in the world.
Net sales are distributed geographically as follows: the United Kingdom (6.7%), the United States (30.2%), China and Hong Kong (17.8%), Australia (5.1%) and others (40.2%).
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