On Wednesday, Citi updated its financial outlook for Assa Abloy (OTC:ASAZY), a global leader in door opening solutions, ahead of the company's first-quarter results for 2024, scheduled for release on April 24. The firm increased its price target on the stock to SEK265 from SEK255 but retained its Sell rating on the shares.
The adjustment comes as Citi anticipates Assa Abloy to encounter challenges in the first quarter, including fewer working days in March and difficult year-over-year comparisons with a robust first quarter in 2023. Analysts at Citi believe that consensus forecasts may underestimate these headwinds, particularly in the Americas and Global Technologies divisions.
Citi's analysis suggests that the Asia-Pacific region's margins will remain under pressure due to a weaker performance in China. The firm expects the company to report a 4.4% decline in organic growth for the group and an adjusted EBIT margin of 15.3% for the first quarter.
Despite a re-rating among peers prompting an increase in the price target, Citi's stance remains cautious. The firm's earnings per share (EPS) estimates reflect a negative 2% impact from foreign exchange rates. Looking forward to 2025, while there is growing optimism about the U.S. residential construction market, Citi anticipates a potential slowdown in the non-residential sector that could offset gains.
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