Source: Investing Published 09/26/2024, 10:44
Morgan Stanley on Thursday revised its stance on GEA Group AG (G1A:GR) (OTC: GEAGY) stock, changing its rating to “overweight” from “equal weight.” In conjunction with the upgrade, the company also raised its target price to €50.00 from €44.00 previously. This revision reflects Morgan Stanley’s expectation that the company’s financial performance will exceed the market consensus.
The Morgan Stanley analyst noted that their new 2027 EBITDA forecast for GEA Group is 6% above the current consensus. This optimistic outlook is partly due to the expectation that GEA will announce new financial targets at its upcoming Capital Markets Day on October 2, 2024. The analyst expects that while GEA’s growth target is likely to remain at 4-6%.
there could be an increase in margin targets in the medium term.
GEA’s current margin targets are set to exceed 15% in 2026.
but Morgan Stanley’s base case suggests a rise to more than 17% by 2028. This forecast is based on the potential for additional cost savings. Notably, GEA has already achieved a 15.2% margin in 2024.
which adds to confidence in its ability to reach its 17% margin target by 2027.
The upgrade and new price target suggest that Morgan Stanley sees a stronger financial trajectory for GEA Group than previously estimated. The upcoming Capital Markets Day could provide further insights into the company’s strategic plans and operational improvements that could confirm Morgan Stanley’s outlook.
In other recent news, GEA Group saw its target price on its shares notably increased by RBC Capital Markets.
which raised it to €46.00 from €45.00 previously, while maintaining an “Outperform” rating. The change comes as RBC acknowledges management’s positive outlook on GEA Group’s margins and expected demand growth in the second half of 2024. The revised estimates include earnings per share (EPS) growth of 9% and 13% for 2024 and 2025, respectively.
At the same time, Citi also raised its target price on GEA Group to €45.30 from €44.00.
while maintaining a “Buy” rating. The revision is attributed to the company’s recovery from a 10% underperformance relative to the SXNP index through mid-June and the expectation of positive news from the company’s upcoming Capital Markets Day in October.
Despite the weak macroeconomic environment and election-related uncertainty.
analysts from both RBC Capital Markets and Citi have maintained a positive outlook for GEA Group. They expect higher targets and free cash flow margins to exceed 10% again. However, caution is expressed regarding the Q2 outlook.
suggesting that it may be too early to predict a beat-to-expect scenario and raise estimates.
These developments point to an optimistic outlook for GEA Group’s financial performance based on management guidance.
market conditions and recent orders. Analysts from both RBC Capital Markets and Citi emphasize the company’s potential for intermittent market share gains and positive price/mix adjustments.
