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Liberum starts Morgan Advanced Materials at ‘buy’, expects strong sales and record margins

Analysts at Liberum started coverage of Morgan Advanced Materials with a ‘buy’ recommendation and 470.0p target price.
In a research note sent to clients, they highlighted that the manufacturer was now firing on all cylinders, with growth across all its divisions.

All of the divisions were now seeing increased profitability, up from just a third over 2015-19.

They also anticipated a near doubling in its free cash flow margins, from 4% in 2015-19, if the manufacturer was able to de-risk its pension.

The good news was that it looked to be one of the most likely to be able to do so in the UK.

On their estimates, the company’s earnings per share were set to jump by more than 20% over the 2022 financial year thanks to 8-10% organic sales growth in 2021-22.

Just as important, the analysts said that Morgan’s margins were set to hit a record 14.5%.

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