FTSE 250 round-up: Mitie, Oxford Instruments, discoverIE
Trio bring cheer to index with year-end updates. City writer Graeme Evans has the details.
16th April 2025 15:28
by Graeme Evans from interactive investor
A seven-year high for MITIE Group (LSE:MTO) and signs of recovery by Oxford Instruments (LSE:OXIG) and discoverIE Group (LSE:DSCV) today provided the FTSE 250 cheer in a busy session for year-end updates.
Mitie surged 6.4p to 128.4p after the support services firm reported good sales momentum, a record pipeline of opportunities and a fresh £125 million buyback of shares.
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A stronger-than-expected end to the financial year means Mitie expects to report 2024-25 revenues 13% higher at a record £5.1 billion and operating profit of £230 million.
The surplus, which compares with an earlier forecast of £225 million and the previous year’s £210 million, has been achieved despite the first leg of a three-year programme of investment to support the facilities transformation of its customers.
The margin slipped 20 basis points to 4.5% but chief executive Phil Bentley said the company was looking at how artificial intelligence (AI) and intelligent process automation can drive this to 5% by 2027.
The positive session for shares also reflected guidance over the impact of employers’ National Insurance contributions, which is now seen at £50 million in the new financial year compared with an initial estimate of about £60 million.
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Panmure Liberum, which increased its bottom-line estimates by 2%, said a valuation multiple of 10.2 times 2025 earnings appeared undemanding given the momentum.
It has a price target of 135p, while Peel Hunt believes the shares have the potential to re-rate as the margin moves towards 5% and the company continues to deploy capital in M&A and buybacks. The broker “confidently” reiterated its price target of 144p.
That compares with this year’s low of 106p in January and 112p as recently as early April.
The shares of consumer electronics business discoverIE have been at a five-year low, dealing a blow to followers of Wild’s Consistent Winter Portfolio.
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The downturn has come despite another year of record profitability, having grown underlying operating profits and margins in each of the last 10 years.
Fourth-quarter orders increased by 11% sequentially and by 15% year-on-year, meaning that earnings for 2024-25 should be slightly ahead of board expectations.
The group used the update to reassure investors on its exposure to the current trade volatility. Out of the company’s 38 manufacturing sites across 20 countries, seven are in the US.
The US accounts for around a quarter of group sales, but its operations in the country import very little from China and have capacity to manufacture all local product sales.
The company said: “We expect to move more production to the US in the coming months, as well as capturing new commercial opportunities from tariff affected competitors.”
The shares rose 11p to 552p but Peel Hunt said they deserve to be at 1,000p as it believes they are mis-priced when set against the company’s mid-term growth targets.
It added: “Management continues to steer profitability very effectively in a challenging revenue environment.”
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The shares of Oxford Instruments also showed signs of recovery, lifting 104p to 1,732p after recently trading at a four-year low of 1,500p.
A year-end update by the provider of scientific technology and expertise to academic and industrial laboratories showed continued momentum in order intake.
Full-year revenues should be 9% higher at constant currency and operating profit up by around 13% in the year to 31 March. That’s despite economic volatility and a pivot away from certain market segments in China.
Shore Capital, which has a price target of 2,600p. highlighted a “credible strategy” to grow the margin to 20% and a much stronger balance sheet with “very strong” cash position.
It said: “We continue to believe its current valuation metrics still significantly fail to reflect Oxford as a higher quality business, its strategic progress and the significant operational improvement undertaken.”
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