Highlights

  • Jefferies has issued a Buy rating on Bodycote with a GBX 915 target price.
  • Berenberg has also assigned a Buy rating, setting a GBX 800 target price.
  • Bodycote reported interim results showing performance in line with expectations, with its full-year outlook unchanged.

Bodycote plc (LSE BOY), the global thermal processing specialist, has drawn renewed attention from the market after receiving two Buy ratings from leading research firms. Jefferies issued a Buy call with a target price of GBX 915, while Berenberg also assigned a Buy rating and set a GBX 800 price target.

Interim Performance in Line with Expectations

The company reported that trading for the first half of the year aligned with expectations outlined in its May update. Although market conditions remained challenging, Bodycote noted improving momentum as the half progressed, supported by sequential growth across most end markets when compared with the second half of 2024.

Core revenue declined 3.6% year-on-year organically, impacted by weaker activity in the Industrial and Automotive segments and delivery timing in Specialist Technologies. Group revenue decreased 4.6% organically, or 7.5% on a total basis. However, the company confirmed that its full-year outlook remains unchanged.

Profitability Impacted by Revenue Mix and FX Movements

Adjusted operating profit for the period came in at GBP 55.1 million, compared with GBP 66.8 million in the first half of 2024. The reduction was driven by lower revenue, sales mix and foreign exchange effects. Statutory operating profit increased to GBP 41.2 million from GBP 30.8 million due to lower exceptional charges.

The adjusted operating margin stood at 14.9%, down from 16.7% in the same period last year. Bodycote highlighted that ongoing investment, portfolio optimisation and efficiency programmes remain central to supporting future performance improvements.

Strategic Programmes Advance as Optimise Initiative Gains Scale

The company continued to make progress on its Optimise, Perform & Grow strategy, with initiatives across service quality enhancements and targeted capacity expansions advancing during the period. The Optimise programme has been updated to deliver an expected operating profit benefit of at least GBP 15 million, with net execution costs reduced to GBP 10–15 million, materially lower than previously estimated.

Bodycote also completed the disposal of ten non-core sites in France to Arcole for EUR 22 million.

Outlook Reaffirmed as H2 Profit Improvement Expected

The Group maintained its full-year guidance and noted that the second half of 2025 is expected to show profit improvement, supported by Optimise programme benefits, continued recovery in Aerospace and better trading in Specialist Technologies.