SGS Moving Up the Gears in First Half

Narrow-moat testing giant SGS proffered up a solid set of first-half results, adding another data point to the recovery narrative. Organic revenue growth hit 12.4%, as we lap the easy comparatives of last year, when the impact of coronavirus-related lockdowns took effect. As businesses reopen, activity levels across the SGS group saw a pickup, with operating leverage in some areas coming into play, helping to push EBIT margins up to 13.8%, from 11.3% this time last year. We do not expect to make any material changes to our numbers on the back of this update and reiterate our CHF 2,100 fair value estimate. With the shares having rallied hard over the last few months, we now view them as overvalued.