Liberum upgrades SIG to ‘buy’, says recovery ‘just getting started’

Analysts at Liberum upgraded insulation and construction products supplier SIG from ‘hold’ to ‘buy’ on Friday, stating the firm’s recovery was “just getting started”.
Liberum, which also hiked its target price on the stock from 55.0p to 65.0p, stated that SIG’s share price could double if its new management team delivers on its growth strategy and also highlighted that there was “material margin upside” to be delivered if the firm’s recent sales momentum continues.

The analysts also think the market has missed “the step change in momentum” brought about by SIG’s boardroom shakeup and strategic partner.

“Our analysis of the sector shows management’s targets are achievable. SIG is well placed to go for growth. It has a strong balance sheet, an incentivised strategic partner and has supportive regulatory tailwinds,” said Liberum.

“SIG’s valuation is too cautious if the sales momentum continues. The shares trade at 0.3x EV/sales. If it can deliver a 5% margin, we believe this could justify a 0.5x EV/sales multiple.”

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