discoverIE – ten years of growth to continue, Trading Update predicts record profitability and better earnings, shares 541p, TP 1110p

16.04.2025

This morning’s Trading Update for its year to end-March from discoverIE Group (LON:DSCV) was extremely positive and it should help to continue the recent share price acceleration.

Extending its growth in underlying operating profits and margins in each of the last ten years, the customised electronics business informed the market that it expects to report, on Wednesday 4th June, that its last year will show record profitability.

The Main Market-listed group, employs some 4,500 people across 20 countries, and has principal operating units based in the UK, Continental Europe, Sri Lanka, India, China and North America.

It is a truly international group of businesses that design and manufacture innovative electronic components for industrial applications.

It provides application-specific components to original equipment manufacturers internationally through its two divisions, Magnetics & Controls, and Sensing & Connectivity.

By designing components that meet customers' unique requirements, which are then manufactured and supplied throughout the life of their production, a high level of repeating revenue is generated with long-term, high-quality customer relationships.

Focussed on key markets driven by structural growth, increasing electronic content and sustainability, namely medical, electrification of transportation, renewable energy, security and industrial automation & connectivity, the group aims to achieve organic growth that is well ahead of GDP and to supplement that with complementary acquisitions.

The business has built an international manufacturing capability over many years that is flexible, resilient, efficient and able to support customers through volatile trading conditions.

More Production Into The US

The company has some 38 manufacturing sites across those 20 countries, seven of which are in the US, providing local manufacturing for over half of local demand.

Its US businesses, which account for around a quarter of sales, import very little from China and have capacity to manufacture all local product sales in the US.

This morning the group has clearly stated that it expects to move more production to the US in the coming months, as well as capture new commercial opportunities from tariff-affected competitors.

Analyst View

Analyst Guy Hewett, at Cavendish Capital Markets, this morning upgraded his earnings estimates for the year to end-March 2025 to 37.6p per share while reiterating his Target Price of 1110p for the equity, against the current 541p, offering a 105% upside.

For the end-March 2025 year, his estimates are for £424.0m (£437.0m) revenues, adjusted pre-tax profits of £49.1m (£48.2m), with 37.6p (36.8p) of earnings and paying a 12.5p (12.0p) per share dividend.

For the current year, he looks for £446.8m sales, £52.0m profits, 39.8p earnings and a 13.0p per share dividend.

In My View

After rising 25p yesterday, I see this group’s shares, now 541p, very soon lifting above the 600p level and then trading the 620p/670p range in reaction to this positive growth.