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Investing.com - Goldman Sachs has reinstated coverage on Mitie Group PLC (LON:MTO) with a Buy rating and a price target of GBP2.30, representing approximately 40% upside potential. This aligns with InvestingPro data showing Mitie is currently trading slightly below its Fair Value, with shares already delivering an impressive 57% return year-to-date.
The investment bank’s decision is based on its expectation that Mitie can deliver organic growth of approximately 5% annually, on average, over fiscal years 2026-2030, exceeding its historical performance levels.
Goldman Sachs attributes this projected growth to Mitie’s strong position in the UK Facilities Management Outsourcing market and robust Projects growth potential. The company has demonstrated strong momentum with 14.3% revenue growth in the last twelve months and a five-year revenue CAGR of 19%.
The firm also sees scope for margin expansion, aided by Mitie’s recent acquisition of Marlowe, which Goldman Sachs believes could add approximately 40 basis points annually to Mitie’s EBITA margin through fiscal years 2026-2028, helping the company achieve its medium-term margin target of over 5%.
Goldman Sachs notes Mitie’s attractive valuation relative to its earnings growth potential, with the stock trading at approximately 12 times 12-month forward price-to-earnings ratio, compared to Goldman’s expectation of approximately 15% earnings per share compound annual growth rate for fiscal years 2026-2028, versus the 12% compound annual growth rate Mitie achieved through fiscal years 2023-2025. InvestingPro analysis indicates the company maintains a "GREAT" overall financial health score of 3.11, with particularly strong ratings in profit and price momentum metrics.
In other recent news, Berenberg has adjusted its outlook on Mitie Group PLC, a prominent player in the UK facilities management sector. The research firm raised its price target for Mitie Group to GBP2.10, up from a previous target of GBP1.85, while maintaining a Buy rating. This adjustment reflects Mitie’s strong market position and its capital-light business model, which offers essential services across both public and private sectors. These updates underscore the company’s dominance in its field, according to Berenberg’s analysis. Investors may find these developments noteworthy as they consider their positions in Mitie Group.
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