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Investing.com -- Genuit Group Plc has been upgraded to “outperform” from “sector perform” by RBC Capital Markets, with the price target held at 505p, in a note dated Wednesday.
The change follows the company’s half-year results for 2025, which showed 6.1% like-for-like revenue growth to £297.8 million and a 2.3% increase in underlying operating profit to £44.6 million.
Margins dipped to 15% due to wage increases, a one-off £0.9 million inventory writedown, and acquisition dilution, but are expected to improve in the second half to about 15.9% for the year.
The upgrade is driven by expectations of stronger growth from 2026, supported by regulatory programs including AMP8, the Future Homes and Buildings Standard, and Awaab’s Law.
RBC forecasts 2025 revenue of £597 million, up from a prior estimate of £584 million, while reducing underlying operating profit to £95.1 million from £96.3 million due to slightly lower margin expectations.
For 2026, forecasts rise to £623 million in revenue and £105 million in operating profit, with margins steady at 16.9%.
RBC notes that Genuit’s shares trade at about 11x 2025 estimated EV/adjusted EBIT, below both peers and the company’s five-year average, which it views as an unwarranted discount.
The analysts highlight that the company has about 20-30% spare capacity from operational initiatives and around £125-150 million available for bolt-on acquisitions, with a focus on expanding outside the UK or adding innovative products.
Risks to the outlook include delays in market recovery, changes to regulatory drivers, wage pressures, and integration risks from acquisitions.