Shares of FTSE 100-listed Melrose Industries PLC (GB:MRO) hit a fresh 52-week high of 582.60p on January 8 after J.P. Morgan labelled it a top pick for 2024. J.P. Morgan cited reasons such as a meaningful margin display, potential for further upside to estimates, and a solid share buyback program to reward shareholders as the factors for its bullish stance on Melrose stock.
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Melrose PLC is a London-based industrial goods company that is a major player in the aerospace industry. The company operates through two units: Engines and Structures. Melrose serves over 90% of the world’s aircraft and engine manufacturers. MRO shares have gained a whopping 80% in the past year.
Factors Behind J.P. Morgan’s Optimism on MRO
On TipRanks, J.P. Morgan analyst Andrew Wilson has a Buy rating on MRO stock with a price target of 620p, implying a 7% upside potential from current levels. The American research firm has placed MRO on the “positive catalyst watch” ahead of its annual results scheduled in March. J.P. Morgan anticipates that good news will keep flowing, backed by solid momentum in 2023. The firm expects Melrose to meet at least the high end of its Fiscal 2023 guidance range as well as lift its Fiscal 2024 outlook beyond the consensus.
During its November trading update, Melrose raised the revenue and profit guidance for Fiscal 2023. At the same time, the British aerospace company gave the first outlook for Fiscal 2024. The company guided for Fiscal 2024 revenue between £3.5 billion and £3.7 billion and Aerospace adjusted operating profit between £520 million and £540 million. The profit expectation was already ahead of the consensus estimates at the time of the announcement, and J.P. Morgan expects these to be revised further.
Is Melrose a Good Stock to Buy?
Overall, analysts are split on Melrose’s stock trajectory. On TipRanks, MRO stock has a Moderate Buy consensus rating based on two Buys versus two Hold ratings. The Melrose PLC share price forecast of 582.50p implies that shares are almost fully valued at current levels.
