On Friday, RBC Capital updated its outlook on Securitas AB (SECUb:SS) (OTC: SCTBF) shares, increasing the price target to SEK90.00 from SEK85.00. Despite the adjustment, the firm maintained an Underperform rating for the security services company.
The revision reflects RBC Capital's analysis of the company's second-quarter results and the impact of recent positive foreign exchange movements.
RBC Capital noted that their underlying EBITA and EPS forecasts for Securitas AB have increased by 1-2%, which has led to the slight increase in the target price.
The analyst from the firm acknowledged the adjustments made based on the recent financial outcomes and currency trends that influenced the company's performance.
The firm expressed caution regarding the future of Securitas AB, anticipating a slowdown in growth as wage inflation decreases. The analyst emphasized the need for Securitas AB to demonstrate sustainable improvements in free cash flow (FCF) generation and return on invested capital (ROIC) before a re-rating could be justified.
Additionally, RBC Capital anticipates higher one-off expenses for Securitas AB in the fiscal year 2024. This expectation is part of the rationale behind the firm's decision to maintain the Underperform rating, indicating a conservative stance on the stock's potential compared to its industry peers.
The analyst concluded by stating that, in their view, there are currently more attractive investment opportunities within the sector, suggesting that investors might find better value in other companies rather than in Securitas AB at this time.
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