Tailored Switch (Halma’s version)

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Tailored Switch (Halma’s version)

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Halma

Reinstating Coverage: BUY | PO: 4,600 GBp | Price: 3,730 GBp

Defensive compounder, c.20% potential upside 08 July 2026

Halma is a high-quality holding company comprising around 50 businesses focused on Equity

safety, environment and healthcare. We like its 1) defensive c.5-6% organic through-

cycle growth, 2) self-funded M&A strategy, and 3) exposure to data centre photonics, Tore Fangmann >> Research Analyst

which lifts organic growth to an 11% CAGR up to ‘29E. Meanwhile, the recent sell-off, Merrill Lynch (DIFC)

following disappointing photonics guidance, creates a buying opportunity. We are +971tore.fangmann@bofa.com4 425 8210

230/130bps ahead of consensus organic growth in FY28/29E, supported by sustained Benjamin Heelan >>

hyperscaler demand. We reinstate at Buy with a PO of 4,600p, implying c.20% upside. Research Analyst

Merrill Lynch (DIFC)

Photonics: exposure to hyperscaler DC investments +44benjamin.heelan@bofa.com20 7996 5723

Through its portfolio company Avo Photonics (20% of group revenue), Halma supplies Alexander Jones, CFA >>

optical switches for photonics-based data transmission in data centres for an Research Analyst MLI (UK)

undisclosed US hyperscaler. We forecast org. growth of c.34%/32% in FY27/28E, ahead +44 20 7995 5828

of consensus (FY28 at +18%) and contributing c.6% to group org growth in FY27E alone. alexander.jones2@bofa.com

Management’s photonics growth guidance of c.30% in FY27 disappointed investors, but UmaResearchSamlinAnalyst>>

we see upside to medium-term growth expectations, as the supply-demand imbalance in MLI (UK)

the broader photonics supply chain supports an elongated revenue ramp. +44uma.samlin@bofa.com20 7995 1964