Fightback continues for this tariffs-hit stock

The post-tariffs rebuild of Renishaw (LSE:RSW) shares continued today after the precision engineering firm reported “good growth” in China and a steady start to its new financial year.

The FTSE 250-listed company rose another 220p to 3415p, returning the stock to positive territory for the year-to-date after falling to 2,150p amid April’s trade war volatility.

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UBS today backed the shares with a target of 3,900p and Peel Hunt upgraded to 4,475p after annual results showed profits in line with the top-end guidance given by management in August.

The latter firm said: “The results underpin our confidence in Renishaw delivering high single-digit revenue growth with a 20% margin through the cycle.”

UBS added that a solid investment case was based primarily on margin expansion, supported by the company’s thematic exposure in automation and robotics.

It said a valuation multiple of 19.5 times forecast 2026 earnings looked undemanding.

Despite global uncertainty, Renishaw said the structural drivers that underpinned its markets continued to generate growth opportunities across its businesses.

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The group’s products give high accuracy and precision, gathering data to provide customers and end users with traceability and confidence in what they're making.

Most of the Gloucestershire-based company’s research and development work takes place in the UK, with its largest manufacturing sites in the UK, Ireland and India.

Chief executive Will Lee said: “We continue to make solid progress with our innovation-led growth strategy, introducing many exciting new products this year and equipping our expanded manufacturing facilities for future growth.”

Results for the year to 30 June were in line with August’s update, with constant currency revenues growth of 3.7% and pre-tax profits up 3.8% at £127.2 million. A final dividend of 61.3p a share is due to be paid on 5 December, lifting the total for the year by 2.5% to 78.1p. 

While the company experienced some net costs when US tariffs came into effect, it said it has since been able to mitigate them with surcharges.

The full-year adjusted operating profit margin was flat at 15.7% but productivity initiatives and cost-reduction plans mean the company is confident of meeting its 20% target.

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UBS estimates the margin improved to 17% in the final quarter of the year.

The bank said that Renishaw’s guidance of a “steady start” to the new financial period pointed to organic revenues growth in the region of 4%.

It added that trading in China was a “nice surprise” after a 12% half-year improvement, noting that “momentum has clearly turned in a meaningful fashion, which is encouraging”. 

UBS said: “The key takeaways are the improvement profitability and the improvement in momentum in China. Moreover, this margin outperformance precedes the impact of current self-help initiatives, suggesting further upside potential for 2026.”

It added that an upcoming change of finance directors marked a “pivotal moment” for Renishaw, with Allen Roberts due to retire at the end of 2025 after more than 46 years with the company.

Interim chair David Grant said last month: “To have remained finance director of a FTSE-listed company for over 40 years is an incredible achievement.

“Allen’s stewardship of Renishaw’s finances through an ever-evolving business landscape has been a cornerstone of its enduring success.”