On Tuesday, Citi revised its price target for Stroeer SE & Co KGaA (SAX:GR), a company specializing in out-of-home advertising, reducing it to €59.20 from the previous €59.30 while maintaining a Neutral stance on the stock. The adjustment comes after a review of the company's second-quarter performance and the third-quarter guidance, which suggests that the momentum in out-of-home (OOH) advertising is expected to continue at a similar pace, with a year-over-year increase of 10%.
The minor revisions to Stroeer's full-year 2024 and 2025 sales estimates have been decreased slightly by 0.4% and 0.5%, respectively. Citi's projections for the company's organic growth in FY24 are now set at 9.6% year-over-year, which is slightly below the consensus of 9.7%. The reassessment by Citi also includes an increase in the weighted average cost of capital (WACC) assumption, which has been raised to 9.2% from the previous 7.7% due to a higher cost of equity.
The new price target is based on sum-of-the-parts (SOTP) and discounted cash flow (DCF) valuations, reflecting the updated assumptions. Despite the lowered price target, Citi has reiterated its Neutral rating on Stroeer's shares, indicating a stance of neither bullish nor bearish.
Additionally, Citi has announced an upcoming annual growth conference scheduled for September 18 and 19, where Stroeer's management will be present. This event will provide an opportunity for investors and analysts to engage with the company's leadership and gain further insights into its operations and outlook.
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