Intertek: Upgrading Moat Rating to Wide From Narrow, Slightly Decreasing Fair Value Estimate

After transferring coverage, we are upgrading our moat rating for Intertek to wide from narrow due to the company's intangible assets and switching costs. Intertek’s intangible asset advantage comes from its suite of over 1,000 authorizations, a portfolio that requires a sizable monetary and time investment and provides a significant barrier to entry. The company’s switching cost advantage is underpinned by its global scale, integration into clients' processes, and high risk of failure. The industry is highly fragmented, with only four global players accompanied by a slew of regional and local firms. This gives the advantage to large players such as Intertek, especially with multinational clients. We are decreasing our fair value estimate by 4% to GBX 5,500 per share to reflect minor reductions in our revenue growth and operating margin forecasts.