On Wednesday, Stifel resumed coverage on Prysmian SpA (BIT:PRY:IM) (OTC: PRYMY) stock, a leading manufacturer in the cable industry, with a Buy rating and a price target set at EUR75.20.
The firm highlighted Prysmian's dominant position in the high-voltage market segment, noting that the company has made significant investments to effectively double its manufacturing and installation capacity.
The investments in the high-voltage segment are expected to almost double the company’s revenue from 2023 to 2027e, which is anticipated to drive Prysmian's growth and improve its profitability. The firm's analyst praised Prysmian's backlog for offering the best visibility and diversification in the industry, along with the lowest concentration risk.
Additionally, Prysmian has expanded its medium-voltage capacity and entered the low-voltage segment through the acquisition of Encore Wire (NASDAQ:WIRE), a US-based company. This move has enhanced Prysmian's exposure to the United States, which is its largest market and where it holds a significant leadership position.
The company's involvement in specialized niches such as data centers is also expected to provide a more favorable earnings growth profile and diversification away from the high-voltage sector.
The analyst noted that Prysmian will host a new Capital Markets Day in March 2025. This event is set to update the company's targets for 2027, as the previous goals established in October 2023 have become outdated due to the Encore Wire acquisition and Prysmian's performance in the Power Grid sector, which has surpassed expectations.
In other recent news, Prysmian SpA has been the subject of several key analyst adjustments. Morgan Stanley (NYSE:MS) downgraded Prysmian stock from Overweight to Equal-weight, lowering the price target to €66.00 from €70.00, citing concerns about the company's organic EBIT growth and potential delays in capacity investments in the United States.
In contrast, Berenberg increased its price target for Prysmian to EUR76.00 from EUR75.00, maintaining a Buy rating on the stock, influenced by the company's financial performance.
Additionally, Citi raised its price target for Prysmian shares to €69.00, citing improved earnings per share forecast and cash flow expectations for the years 2024-2026.
JPMorgan (NYSE:JPM) also resumed coverage on Prysmian shares with an Overweight rating, significantly raising its price target to EUR71.00, influenced by the company's strategic moves, including the acquisition of Encore Wire.
These recent developments follow Prysmian's first-half financial results for 2024, with reported adjusted EBITDA of EUR869 million, closely aligned with the consensus estimate of EUR864 million.
However, the company's updated guidance for the full year 2024, with adjusted EBITDA forecasted at EUR1,900 million to EUR1,950 million, fell short of initial expectations. These developments highlight the shifting analyst sentiment and ongoing financial performance of Prysmian.
InvestingPro Insights
Building on Stifel's positive outlook for Prysmian SpA, recent data from InvestingPro provides additional context to the company's financial performance and market position. Prysmian's market capitalization stands at $18.36 billion, reflecting its significant presence in the Electrical Equipment industry. The company's revenue for the last twelve months as of Q3 2024 reached $17.74 billion, with a notable quarterly revenue growth of 18.82% in Q3 2024, aligning with Stifel's expectations of strong growth in the high-voltage segment.
InvestingPro Tips highlight Prysmian's consistent dividend performance, having maintained dividend payments for 17 consecutive years and raised them for 4 consecutive years. This trend underscores the company's financial stability and commitment to shareholder returns, which could be attractive to investors seeking income alongside growth potential.
The company's profitability is evident from its positive earnings over the last twelve months, with analysts predicting continued profitability this year. This aligns with Stifel's view on Prysmian's improving profitability driven by its strategic investments and market positioning.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of Prysmian's market performance and future prospects.
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