Broker snap: Ricardo set to benefit from CO2 trends

26th Nov 2009 11:31

As a leading provider of innovative engineering solutions Ricardo is well placed to benefit from the decarbonisation of the world's energy systems, reckons Charles Stanley.'Recently introduced CAFE [Corporate Average Fuel Economy] standards in the US and fleet average CO2 targets in the EU now require innovation on a scale never before achieved. OEM's [original equipment manufacturers] and their suppliers now need to spend billions to meet the requirements in what amounts to just one and half vehicle development cycles.,' notes Charles Stanley analyst Richard Hickinbotham.'Deferment of this development expenditure is coming to an end and Recovery Act dollars are expected to have added impact. Ricardo is well positioned to benefit as OEM's are under resourced to cope with the challenges ahead.' Hickinbotham believes.The broker has reiterated its 'buy' recommendation and upped its price target from 260p to 315p following last Thursday's interim management statement from Ricardo, which 'confirmed stabilisation in a number of core markets and clear signs of increasing sales interest, particularly in the Asian regions.''The group has the opportunity to deliver premium rates of growth over the medium to longer term both from its traditional automotive markets and also from allied sectors where there is the potential for revenues of £30m each,' the broker concludes.