Mayfield Group Holdings Ltd (ASX: MYG) shot ahead of the ASX yesterday when it rose 9% in a single session.
This brings its 12-month growth spree to over 152%.
Despite already rising significantly this past year, the team at Bell Potter still believes there is more room for growth.
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Why did Mayfield Group shares rise?
Mayfield Group provides communication network solutions to government agencies, military organisations, and corporate clients
It appears Mayfield Group is enjoying strong investor interest following its announcement on July 13.
The company has entered into a binding Asset Sale Agreement to acquire Switchboards Division of Nilsen (SA) Pty Ltd (SDN), including its N-Series product line and associated intellectual property for a $4.0m cash consideration.
The acquisition consideration will be funded from existing cash reserves. The deal is expected to complete on 31 July 2026, with progressive transfer of employees and assets through to 31 October 2026. SDN supplies products into the Commercial, Industrial, Infrastructure, Defence, Mining, Utilities and Data Centre construction markets.
In simple terms, Mayfield is spending $4 million to buy Nilsen's switchboard business.
This includes its products, skilled employees, customer orders, and technology to grow its sales, strengthen its manufacturing business, and increase future earnings.
What did Bell Potter have to say?
Following the announcement, Bell Potter provided updated guidance on this ASX stock.
The broker said the move broadens Mayfield's switchboard offering across key growth markets in Australia.
It also strengthens the company's ability to grow organically through an expanded workforce, IP and new customer relationships. Additionally, it enables the company to pursue larger and more diverse switchboard opportunities nationally.
The acquisition includes the transfer of $3.9m of WIH and is expected to add $10-15m of revenue in FY27 (effective November 2026; $15-23m annualised). Importantly, improved utilisation at the Royal Park facility should enhance site profitability.
Healthy upside
Based on this guidance, the team at Bell Potter retained its buy recommendation on this ASX stock.
However, it slightly lowered its price target to $3.20 (previously $3.40).
From yesterday's closing price of $2.41, this still indicates 32% upside.
The SDN acquisition is strategic, supporting MYG's expansion into new markets and with new customers. The acquisition consideration is not onerous; MYG maintains financial flexibility to continue pursuing other M&A opportunities.
We believe this valuation rebasing has created a good buying opportunity of a small-cap industrial business which we expect to deliver EPS growth of 36.7% in FY27 and 27.5% in FY28, and has strong upgrade potential.
