Halma Understanding the Photonics Business: Running sensitivities to hyperscaler capex

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Halma Understanding the Photonics Business: Running sensitivities to hyperscaler capex

C A Z E N O V E Europe Equity Research

19 May 2026

Halma Neutral

HLMA.L, HLMA LN

Understanding the Photonics Business: Running Price (18 May 26):4,488p

sensitivities to hyperscaler capex Price Target (Jun-27):4,150p

Since taking coverage of Halma last month, we have received questions on its European Capital Goods

ACPhotonics business, especially as the read-across from the Capital Goods sector is Chitrita C Sinha

very positive. The Photonics business in question, Avo Photonics, was acquired in (44-20) 7742-7176

2011 with revenues of c.£4m. By HY26, this business has grown to 19% of the chitrita.sinha@jpmorgan.com

group due to its significant exposure to one hyperscaler customer. Due to J.P. Morgan Securities plc

confidentiality agreements, Halma is unable to provide details on the customer or Phil Buller

technology. In this note, we explore what the technology may be, the likely (44-20) 3493-9403

phil.buller@jpmorgan.com

hyperscaler (we conclude Google likely over Meta and Microsoft) and upside risk J.P. Morgan Securities plc

to consensus expectations. While the analysis is limited by the disclosure, if the

Akash Gupta

business grows between 20-25% in 2027 and 2028, our current base case, there is (44-20) 7742-7978

only LSD% upside risk to consensus at the group level. We observe that only in the akash.z.gupta@jpmorgan.com

blue sky scenario of c.50% growth is there meaningful upside, although this is far J.P. Morgan Securities plc

ahead of current hyperscaler capex expectations. The stock trades on 36x 2026 Adj. Jeremy Caspar

P/E, highest in our coverage, reflecting the quality of earnings but also capturing (44-20) 3493-5188

the significant DC-led growth.