Credit Suisse thinks the accelerating year-end and positive macro outlook for ALS bode well for an ongoing upgrade cycle. In light of a unique market position and more expensively priced offshore peers, the broker does not see the valuation as stretched.
The second half revenue at $1.76bn was down -4% over last year and was in line with forecast with operating income of $301m also 1% ahead of Credit Suisse’s estimate. The result was led by a combination of cost-outs and a solid fourth-quarter recovery in Geochem.
The broker highlights brighter prospects in FY22 driven by better Life Science volumes going into the first quarter of 2022 and commodities momentum.
Credit Suisse retains an Outperform rating and increases the target to $13.45 from $10.40.
Sector: Commercial & Professional Services.
Target price is $13.45.Current Price is $12.30. Difference: $1.15 – (brackets indicate current price is over target). If ALQ meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
