(Sharecast News) – Goldman Sachs upgraded its stance on Aston Martin Lagonda on Wednesday to ‘buy’ from ‘neutral’ as it argued that new products pave the way for a turnaround in fortunes.
The bank said it was upgrading the shares “ahead of a 24-month period during which we expect steady progress”.

Through to the end of 2024, Goldman expects Aston Martin to unveil one new core model every quarter, creating an unprecedented pipeline.

“Over the same period, new specials should help to bolster higher average selling prices, gross margins and ultimately EBITDA,” it said.

GS expects the luxury car maker to deliver 2H23 adjusted EBITDA of €244mn, a run-rate close to AML’s €500mn 2024/25 target.

“As AML introduces its next-generation products, we forecast a step forward in ASPs and gross margins,” GS said.

“We believe solid initial sales of core models and the contribution from specials provide a degree of certainty over AML’s 2024 financials, and ‘an option’ on medium-term success.

“However, for greater conviction that AML can achieve ASPs and margins consummate with the luxury peer group on a sustained basis, we believe it is necessary to assess waitlists, ASPs and volumes more than 12 months after new products launch.”

Goldman noted that despite the year-to-date performance, AML shares are down 37% since the start of 2022.

“We do not believe the share price gives full credit to AML meeting its near-term (2024/25) targets,” it said.

“On average, we see AML reaching these targets with £2.1bn in revenue and £515mn of adjusted EBITDA.”

Elsewhere, Berenberg initiated coverage of recycling and waste management services company Renewi with a ‘buy’ rating and 710p price target.

The bank said Renewi currently exhibits a depressed valuation, given a combination of legacy issues and concerns about its near-term forecasts due to recent tailwinds from elevated recyclate and commodity prices.

“We think these concerns are overdone and the company offers a material re-rating opportunity for patient investors,” it said.

It added that Renewi has highly attractive medium-term drivers, as well as near-term strategies to boost profits – offsetting pricing headwinds – and should achieve a material step-up in cash generation over the next couple of years as legacy headwinds unwind.

Berenberg said the core Renewi story is “simple”.

“We believe that recycling volumes should be positive over the medium term, with tailwinds from GDP growth, increased regulation and societal pressures for greater recycling rates, offsetting trends for more reusable materials,” it said.

“Structural growth in demand for recycled materials should then be supportive for prices, leaving a growing business over the medium term. Renewi will stay at the forefront of this industry, we think, given its leading position in two of the most advanced European recycling markets and its history of innovations, investments and attractive rates of return.

“Owing to all of this, combined with a step-up in growth capex, we believe that 5% annual organic growth should be achievable.”

Related articles

Shore Capital hails impressive first half from JD Sports

Shore Capital hails impressive first half from JD Sports

(Sharecast News) - Shares in JD Sports Fashion surged on Thursday morning after the sportswear retailer beat forecasts with its interim results, with broker Shore Capital hailing "significant progress" as it reiterated its 'buy' rating on the stock. Pre-tax profit...

Shore Capital upgrades Supermarket Income REIT to ‘hold’

Shore Capital upgrades Supermarket Income REIT to ‘hold’

(Sharecast News) - Shore Capital has upgraded its recommendation for Supermarket Income from 'sell' to 'hold', saying that the real estate group's full-year results demonstrated "portfolio resilience" in the second half. The company, which holds a portfolio of 51...

Berenberg sees upside risk to profits at Gym Group

Berenberg sees upside risk to profits at Gym Group

(Sharecast News) - Berenberg has reiterated its 'hold' rating on Gym Group after the company's positive interim results last week, but said that some upside risk to forecasts remains this year. "While we think that there is an opportunity for a recovery, we are still...

Latest Articles

Shore Capital hails impressive first half from JD Sports

Shore Capital hails impressive first half from JD Sports

(Sharecast News) - Shares in JD Sports Fashion surged on Thursday morning after the sportswear retailer beat forecasts with its interim results, with broker Shore Capital hailing "significant progress" as it reiterated its 'buy' rating on the stock. Pre-tax profit...

Time for Japan to act (II): State Street Global Markets

Time for Japan to act (II): State Street Global Markets

Written by Michael Metcalfe, Head of Macro Strategy, State Street Global Markets  Writing ahead of the September BoJ gathering in 2022, we argued in Time for Japan to act (first edition!) that the authorities should begin monetary tightening both through moving the...

Europe open: Shares slide on hawkish Fed as eyes turn to BoE

Europe open: Shares slide on hawkish Fed as eyes turn to BoE

(Sharecast News) - European stocks opened in the red on Thursday after hawkish comments from the US Federal Reserve on future rate rises dampened sentiment and investors turned their attention to the Bank of England's own policy meeting. The pan-European Stoxx 600...

Capita signs two new contracts worth £565m

Capita signs two new contracts worth £565m

(Sharecast News) - Outsourcing group Capita said it has signed two new contracts with the UK and Northern Ireland governments worth a combined £565m. Four months after Capita was selected as the preferred bidder, the group has now confirmed it has sealed the deal to...

Rise in UK borrowing limits Hunt’s scope for tax cuts

Rise in UK borrowing limits Hunt’s scope for tax cuts

(Sharecast News) - Britain's budget deficit in August was slightly higher than expected, according to official data published on Thursday, meaning Finance Minister Jeremy Hunt will have less scope for tax cuts ahead of the General Election. Public sector net borrowing...

Join our mailing list

Subscribe to our mailing list to receive regular updates!

No Fields Found.
x