Halma PLC: Small 2026/27 consensus upgrades, but driven more by strong cost execution than Photonics at this stage

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Halma PLC: Small 2026/27 consensus upgrades, but driven more by strong cost execution than Photonics at this stage

UpdateMrevenues in the last two years. Initially, we think this Photonics growth may be

perceived as somewhat below expectations, due to the implied photonics growth

deceleration in FY26/27 vs FY25/26. However, we think that the risk is likely to the

upside on this guidance through the year, also because Halma has shown a track

record of upgrading their Photonics revenue growth guidance in prior years.

Putting this all together, we think it illustrates Halma is executing well on the

strategy. The 2H25/26 results showed a 6% EBIT beat, driven by strong cost control

and product mix in Safety and Healthcare. The guidance for FY26/27 will drive a

small organic upgrade to consensus growth, driven by growth across the entire

portfolio. This growth also continues to give Halma the opportunity to reinvest in

the business across investment in R&D, human capital and M&A. On the M&A point,

we also think the recent disposals, as well as continued acquisitions at favourable

multiples, demonstrate Halma's continued push to improve and pro-actively manage

their portfolio of companies.

We reduce our FY26/27 and FY27/28 EPS forecasts by -5.6% and -6.1%

respectively. Primarily this is driven by lowering our Photonics growth assumptions

in-line with company guidance of 30% (prior MS forecast was 50%). We also reflect

a slightly higher tax rate. Our applied EV/EBIT multiple rises from 23x to 25x, as we

roll forward to 2028, driven by peer re-rating. Our target price thus moves to £44.5

per share (from £45), while our bull and bear cases are unchanged.

Results. 2H26 sales came in 1% ahead of consensus, and 2H operating profit came in

6% ahead of consensus.