Renishaw Gets a Semiconductor Upgrade

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Renishaw's industrial recovery is starting to look less like a rebound and more like a proper upcycle, with demand from semiconductor equipment, electronics manufacturing and aerospace customers accelerating sharply.

Bank of America responded by double-upgrading the shares to Buy and almost doubling its price target, giving investors another reason to chase the stock higher.

Renishaw shares rose more than 5% after Bank of America upgraded the precision-engineering group from Underperform to Buy and lifted its price target to 5,400p from 2,779p. The broker argued that the current demand cycle is proving considerably stronger than it had previously expected, particularly across semiconductor and electronics manufacturing equipment and aerospace and defense.

That bullish call follows a run of increasingly strong trading updates from Renishaw itself. Fourth-quarter revenue reached a record of approximately £243 million, up 27% year on year and 18% from the previous quarter, while full-year revenue is expected to reach around £815 million (about $1.1 billion), representing growth of 14%.

Adjusted operating profit for the year is expected to be approximately £152 million, while adjusted profit before tax should reach roughly £167 million, up 31% year on year. Renishaw said strong demand from semiconductor and electronics manufacturing equipment customers continued through the fourth quarter alongside robust aerospace and defense activity.

The momentum had already been visible earlier in the year, when nine-month revenue rose 9.5% to a record £571.6 million and the order book expanded across all three operating segments. Position Measurement revenue was particularly strong, rising almost 17%, while Specialised Technologies grew more than 21%.

Bank of America now thinks analysts are still treating Renishaw as if it were operating in a normal mid-cycle environment rather than one where demand is running above historical levels. It raised its 2027 EBIT estimate by 22% to £181 million, which sits around 11% above current consensus expectations.

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Renishaw occupies a useful position in several of the investment themes currently absorbing enormous amounts of capital because its precision-measurement systems, encoders and manufacturing technologies sit inside the equipment needed to produce increasingly complicated products.