On Wednesday, JPMorgan (NYSE:JPM) changed its stance on Holcim Ltd (OTC:HCMLY) (HOLN:SW) stock, shifting the rating from Neutral to Overweight and increasing the price target to CHF108.00 from the previous CHF81.00. The financial firm's analysis indicates a change in valuation perception following Holcim (SIX:HOLN)'s performance relative to its peers.
The upgrade comes after Holcim's shares underperformed compared to other companies in the same sector. Specifically, Holcim's shares fell behind its Heavyside peers by 9 percentage points year-to-date, and 14 percentage points when compared to Heidelberg (ETR:HDDG) and Buzzi. This underperformance has led JPMorgan to recognize what it now considers a compelling valuation argument for Holcim.
JPMorgan's revised valuation is based on a sum-of-the-parts (SOTP) methodology. The new analysis suggests that the European Heavyside business of Holcim is now valued at a multiple of 7 times, which represents a 12% discount when compared to Heidelberg. This discount is seen as an opportunity for investors, as the valuation appears more attractive.
Despite the positive upgrade, JPMorgan did acknowledge some uncertainties looking forward. The analyst noted potential question marks that could arise ahead of the two Capital Markets Days (CMDs) that Holcim is expected to host in early 2025. These events could provide further insight into the company's strategic direction and financial health.
Investors and market watchers will likely keep an eye on Holcim's stock performance and the forthcoming CMDs for indications of the company's trajectory. The upgrade from JPMorgan suggests a more optimistic outlook for Holcim's shares, although the future holds variables that could impact the company's valuation and stock performance.
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