BofA Upgrades Renishaw to Buy, Doubles Target
BofA Securities upgraded precision‑engineering company Renishaw plc to a “buy” rating from “underperform” and increased its price objective to 5,400 pence, up from the previous target of 2,779 pence. The broker also raised its fiscal 2027 earnings‑before‑interest‑and‑tax (EBIT) estimate by 22% to £181 million, which is 11% above the consensus forecast. In addition, BofA lifted its three‑year earnings‑per‑share compound annual growth rate (EPS CAGR) estimate to 21% from 10% and expects earnings growth to normalise in fiscal 2029.
The upgrade is underpinned by stronger‑than‑expected demand from semiconductor, electronics manufacturing, aerospace and defence customers. BofA’s U.S. semiconductor team projects wafer‑fabrication equipment growth of more than 30% in calendar 2027, which should drive a 20% increase in Renishaw’s Position Measurement division – a segment that contributes 30% of group revenue. Orders for Japan’s machine‑tool builders rose 36% in the first half of calendar 2026, supporting a 17% growth forecast for the Industrial Metrology division, which accounts for 58% of revenue. Growing adoption of additive manufacturing, especially in aerospace and defence, is expected to lift the Specialised Technology division – representing 12% of revenue – by 22%. BofA notes that every leading indicator it tracks suggests Renishaw will grow faster than the consensus assumption of 9% annual growth.
A recent site visit to Renishaw’s Miskin facility gave BofA confidence that the company can expand output without substantial incremental capital spending. Existing capacity is expected to provide operating leverage that will raise return on invested capital (ROIC) from 10% in the first half of fiscal 2026 to 14% by fiscal 2028. The broker also highlighted that Renishaw holds excess cash of £210 million, equivalent to about 6% of its market capitalisation, which should be available for distribution by fiscal 2027.
BofA’s revised discounted‑cash‑flow valuation of 5,400 pence implies roughly a 10% upside from the current share price. Of the increase from the prior target, 56% stems from higher explicit forecasts, 21% from medium‑term assumptions, 14% from a higher terminal growth rate, with the remainder attributable to roll‑forward assumptions.