On Wednesday, Norma Group SE (NOEJ:GR) experienced a revision in its stock outlook by Berenberg, as the firm lowered its price target from EUR22.00 to EUR19.00, yet upheld a Buy rating on the shares. The adjustment follows Norma's third-quarter performance, which was affected by decreased product volumes in light vehicles (LV) and commercial vehicles (CV) across the EMEA and Asia-Pacific regions.
The analyst pointed out that, despite the first measures of the company's Step Up restructuring programme being implemented, the negative operating leverage in EMEA was an unexpected setback for the quarter.
However, Norma Group has reaffirmed its guidance, indicating a steady adjusted EBIT margin of around 8.0% despite a projected sales decline of 2-5% and investments around EUR2 million in Water Management. This implies that the Step Up programme's measures are beginning to have an impact.
The company's confirmation of its operating cash flow guidance was also seen as a positive sign by the analyst. With an improvement in its EBITDA leverage to 2.2x in the third quarter, Norma Group is positioned well below its financial covenants, indicating a sound financial structure.
The analyst's comments reflect a mixed perspective on Norma's recent financial results, acknowledging the challenges faced in Q3 while also recognizing the company's efforts to maintain stable financial health through its restructuring initiatives and financial management.
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