Solvay: UBS deems stock discounted: upgrades to buy
(CercleFinance.com) - This morning, UBS has upgraded its "neutral" rating on the Solvay share to buy, believing that the title of the Belgian chemical group is excessively discounted relative to peers.
The broker has also raised its 12m target price for the share from 103 euros to 105 euros, which means upside potential of over 20%.
After falling by 35% since its peak in 2017, the Solvay share now prices in less favourable fundamentals, UBS believes, especially at its aerospace, electronics and automotive divisions.
However, now, UBS believes that the group is able to exceed market expectations, particularly through its exposure to aerospace and polymers for the automobile industry. UBS expects organic growth will increase from 1.3% p.a. between 2015 and 2018 to 3.5% p.a. between 2019 and 2021.
From the point of view of cash-flow, UBS says that the Solvay share is 36% discounted relative to peers.
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