Shares in RS Group (LSE: RS1), the industrial electronics and maintenance products distributor, fell almost 3% after Deutsche Bank downgraded the stock from ‘buy’ to ‘hold’ and cut its price target from 800p to 700p.
The shares, down 8% year-to-date, were changing hands for 571.5p.
Analyst David Brockton said Deutsche Bank’s previous ‘buy’ thesis, initiated in November 2025, had rested on expectations of a like-for-like (LFL) revenue recovery after roughly three years of decline.
That would represent a rebound in operating margins from 9% toward the cycle average of 10% and prior peak of 13.5%, and the potential for RS Group to put its under-leveraged balance sheet to work.
Brockton noted that improved purchasing managers’ index (PMI) readings in late 2025 and early 2026 had initially supported that view, with February 2026 new orders reaching their highest level since early 2022.
However, RS Group’s March pre-close update for its financial year 2026 disappointed on second-half LFL growth, with regional weakness in Mexico creating a slower revenue run-rate heading into financial year 2027.
Deutsche now believes the conflict in Iran is likely to delay or moderate the strength of the industrial recovery in the near term.
