DAVY VIEW

We downgrade our forecasts and rating following the June trading update. Despite the weaker H2 guidance/outlook being reflected in our new forecasts, there remains a significant H2 EBITA weighting (now 30%:70% H1:H2 split) which increases the risk of further downgrades later in the year, in our view. We move our rating to ‘Underperform’ from ‘Neutral’ and reduce our 12-month price target by 13.3% to 3,070p. The risk has moved from overpaying for Oxford Instruments to becoming an acquisition target for a larger US peer. Interim results are due on July 30th.