On Wednesday, RBC Capital increased the price target for Recordati SpA (REC:IM) (OTC: RCDTF) shares to €50.50, up from the previous €46.50, while maintaining a Sector Perform rating on the stock.
The adjustment comes as RBC Capital's analyst has revised their financial model following the full release of Recordati's 2023 Annual Report and in anticipation of the company's first-quarter results, which are due to be announced on May 9, 2024.
The analyst noted that while their adjusted earnings per share (EPS) forecasts have been slightly reduced due to higher costs, the discounted cash flow (DCF) model supports an increased price target as it accounts for the time value of money over an additional 12 months. This update reflects a detailed review of the company's financials and expectations for its performance.
Recordati has preliminarily reported first-quarter sales of €608 million, which includes a boost in inventory levels similar to that experienced in the first quarter of 2023. The analyst from RBC Capital forecasts that the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first quarter will reach €239.2 million, with adjusted net income projected at €162.2 million.
The price target increase suggests that RBC Capital sees potential for Recordati's stock value to grow, despite the adjustments made to earnings forecasts. The company's financial health and upcoming quarterly report appear to be key factors in the analyst's assessment.
Investors will be looking forward to Recordati's official first-quarter results in May for confirmation of the company's financial trajectory and to see if the performance aligns with RBC Capital's expectations and the newly set price target.
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