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Investing.com - Deutsche Bank upgraded RS Group Plc (LON:RS1) from Hold to Buy and set a price target of GBP7.60, citing reassuring trends in the company’s recent performance.
The upgrade follows three years of earnings per share downgrades for RS Group, with the company’s first-half results meeting expectations. The results showed like-for-like revenue declining 1% and operating margins decreasing 50 basis points to 8.7%.
Deutsche Bank highlighted several positive developments, including RS Group’s return to like-for-like growth of 1% in the second quarter and evidence that pricing initiatives are delivering a 2% benefit.
The financial services firm also noted improved cost management compared to recent history, with performance in line with guidance. RS Group demonstrated solid cash generation with 107% operating cash conversion.
This strong cash performance has enabled further deleveraging, with net debt to EBITDA now at 1x compared to the company’s target range of 1-2x, according to Deutsche Bank’s analysis.
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