Berenberg upgrades RS Group to 'buy'

(Sharecast News) - RS Group received an upgrade from 'hold' to 'buy' at Berenberg on Thursday, with the broker lifting its price target to 900p from 650p as it argued that lagged PMI strength was now turning the earnings cycle in the distributor's favour. Berenberg said RS, as a late‑cycle MRO supplier, should benefit from industrial PMIs that have remained in expansionary territory through 2026, with the broker expecting the company's H1 results on 5 November to deliver the first revenue‑led guidance upgrade in almost five years.

The German bank lifted its FY27 like‑for‑like revenue growth forecast from 3.2% to 4.5%, driving a roughly 5% upgrade to earnings per share, and said earnings were now well supported by trough margins and significant cost savings already embedded in the business.

While geopolitical risks and higher rates raise questions over the durability of short‑cycle industrial output, Berenberg argued that RS's late‑cycle, largely non‑discretionary MRO demand and pricing power should underpin near‑term outperformance.

Berenberg also highlighted the sizeable operating margin opportunity on RS's restructured platform, noting conversion margins of 21% versus a 31% peer average and management's medium‑term ambition for mid‑teens EBIT margins, which it said implies material upside to outer‑year forecasts.











Reporting by Iain Gilbert at Sharecast.com