PHTM is at an inflection point. We see new technology and rapid expansion in a complementary segment as key factors behind an imminent step-up in profit growth. The stock also provides a substantial level of exposure to recovering European economies, especially France (c45% of PBT). In our view, consensus significantly underestimates these improving profit dynamics and emerging growth in Photo/ID, Laundry & Kiosks. Our base case assumes a 3-yr EPS CAGR of 10% (vs cons c5%) and our analysis suggests scope for this to be 18-23%. We initiate with a 225p target price and highlight a 2-3 year bull case of 350p (10x cal20 EBITDA). Interims are on 11 Dec.
