Is this FTSE 100 stock at an attractive entry point?

An entry point into FTSE 100 stalwart Halma (LSE:HLMA) has been flagged by a City bank after it said the quality compounder looked “outright attractive” in the wake of a 15% shares slump.

The support of UBS follows annual results, when Halma grew revenue by 15% to above £2.5 billion for the first time and delivered its 23rd consecutive year of adjusted profit growth.

UBS said that management had “delivered spotlessly” as second half earnings came in 5.5% ahead of the City consensus and the company reported a positive start to 2026/27.

Despite the progress, shares unwound all of the previous two months' outperformance as the group of life-saving technology companies disappointed with its guidance in photonics.

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This part of the business has provided a tailwind to Halma’s growth in recent years and offers a profile that differs from that of the wider group in terms of pace, scale and longevity.

Halma built its presence through the 2011 acquisition of Avo Photonics, having taken the view that this would be a critical enabling technology across a wide range of end markets.

One such opportunity has resulted in a relationship of more than a decade with an unnamed large “hyperscaler” technology customer, leading to the co-design and manufacture of multiple generations of optical switches.

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In 2026, this customer accounted for 20% of group revenue compared with 15% in 2025.

Halma said in this month’s annual results: “This is an exceptional success story and a testament to the local management team in delivering at scale and enabled by the support that comes from the Halma model.”

The incremental contribution to organic revenue growth from the photonics business was eight percentage points in 2026, slowing to five percentage points in the current year.

This guidance forms part of expectations that the group will deliver low double-digit percentage organic constant currency revenue growth in this financial year.

Halma added that the economic and geopolitical environment remains uncertain and that  its companies continue to experience varied conditions in their end markets,

Operating across the three divisions of safety, the environment and health, Halma’s products include those to aid safety such as smoke alarms, devices to measure climate change and pollution, as well as medical instruments to test eyesight and hearing.

Five acquisitions were completed for a record £447 million in the 2025/26 financial year, with two more since the year end for about £75 million.

They align with the Halma model of not overpaying or doing restructurings and buying higher margin businesses with growth opportunities. It is careful to choose businesses who are niche specialists and who know their customers and their markets.

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UBS believes the core portfolio is well positioned to deliver another year of healthy 6-7% growth. Its bull case scenario for 2027 would be another year of about 16% organic growth for Halma, with 35-40% growth at Photonics and 7-8% in the rest of the portfolio.

It regards this outcome as plausible given Photonics’ success in scaling so far while across the rest of the portfolio it highlights rising exposure to the electrification structural theme, the cyclical recovery in industrial automation and scope for further recovery in healthcare.

Halma is currently trading on a one-year forward price/earnings multiple of 31 times and enterprise value of 23 times, which UBS finds is “at least undemanding and arguably outright attractive” in the light of Halma’s historical 10-year average of 31x and 25x respectively.

The bank has been Buy rated on the stock since March 2024, when Halma traded at 2,293p. The shares were today at 3,960p, which compares with UBS’s unchanged price target of 4,775p.

Exane BNP recently raised Halma to 'outperform' with a target of 4,550p, while Goldman Sachs and Citigroup have Buy recommendations and estimates of  5,010p and 4,600p respectively.