HALMY - Halma: High-Quality Business With Limited Upside

2024-03-14 09:00:00 ET

Summary

• Halma continues to maintain its health growth trajectory, comprised of a broadly equal contribution from M&A and organic growth.
• The company is a leader in a number of segments within its industry, while also benefiting from tailwinds such as increased infrastructure spending.
• We are critical of Halma’s lack of margin development and declining ROE, albeit this has yet to restrict its broader trajectory due to the delivery of organic growth.
• The stock is performing well relative to its peers, with better margins and comparable growth. This illustrates the company’s strong competitive position and pricing power.
• Halma's valuation does not suggest sufficient upside in our view, which, given the limited accretive development, implies a downgrade to a hold in our view.

Introduction And Thesis

Halma Plc (HLMAF) is a global group of technology companies that specialize in safety, health, and environmental solutions. With a diverse portfolio of businesses, Halma focuses on developing innovative products and technologies to protect people and assets, prevent accidents, and improve operational efficiency. The company operates across various sectors, including healthcare, environmental, and industrial safety....

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