Analysts at Berenberg reiterated their ‘buy’ rating on UPVC products manufacturer Eurocell on Thursday as the group continued to make market share gains.
Berenberg said Eurocell’s first-half results were “robust”, with the group delivering 13% revenue growth, maintaining guidance, and continuing to win new fabricator customers, supporting 2023 forecasts.
The German bank stated that with Eurocell shares now trading on a 7.8x price-to-earnings ratio, it thinks they are “compelling” given several company-specific tailwinds – including market share gains, favourable sustainability tailwinds, and margin benefits from new facilities.
Berenberg also expects the group to end 2022 with leverage of 0.3x net debt/underlying earnings, aided by a reduction in inventory, leaving plenty of optionality.
“As the benefits of the new facilities come through, we believe management’s focus can shift towards M&A and supplementary cash distributions,” said the analysts.
Berenberg also maintained its 310.0p target price on the stock.
Reporting by Iain Gilbert at Sharecast.com
