Renishaw Double-Upgraded to 'Buy' by BofA on Stronger Industrial Demand

BofA Securities has issued a double upgrade for precision-engineering company Renishaw, raising its rating to “Buy” from “Underperform” and significantly increasing its price objective. The bank now targets a price of 5,400p, up from a previous 2,779p, citing a demand upcycle that is proving stronger than previously anticipated.

Analyst Sees Above-Cycle Growth

In a note to clients, BofA stated its conviction that the current market environment for Renishaw is "above-cycle," a view it believes is not fully reflected in consensus estimates. The bank raised its fiscal 2027 EBIT estimate for the company by 22% to £181 million, placing its forecast 11% above the market consensus.

This optimistic revision follows Renishaw's own guidance update, which has been raised by 16% since the company reported its first-half results in February 2026, driven by what it called exceptional second-half demand.

Sector-Specific Tailwinds

BofA identified several leading indicators that support its forecast for growth exceeding the consensus assumption of 9%. The analysts highlighted three key drivers across Renishaw's main divisions:

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• Semiconductors: BofA's U.S. semiconductor team forecasts wafer fabrication equipment growth of over 30% in calendar 2027. This is expected to support 20% growth in Renishaw’s Position Measurement division, which accounts for 30% of group revenue.
• Industrial Metrology: Data from the Japan Machine Tool Builders’ Association showed a 36% rise in orders in the first half of calendar 2026, underpinning a projected 17% growth for Renishaw's largest division (58% of revenue).
• Specialised Technology: Broadening adoption of additive manufacturing, particularly in aerospace and defense, is expected to drive 22% growth in this division, which represents 12% of group revenue.

Upgraded Financial Outlook

Based on these stronger demand signals, BofA has more than doubled its three-year earnings-per-share (EPS) compound annual growth rate (CAGR) estimate for Renishaw to 21%, up from 10%. The bank also noted that a recent site visit to Renishaw’s Miskin facility increased its confidence in the company's ability to expand production without significant new investment.

This existing capacity is expected to create operating leverage, potentially driving the company's return on invested capital from 10% in the first half of fiscal 2026 to 14% by fiscal 2028. BofA also calculated that Renishaw could have £210 million in excess cash, equivalent to 6% of its market capitalization, available for distribution by fiscal 2027.