Saint-Gobain: Morgan Stanley upgrades to 'buy'
(CercleFinance.com) - In a research note published last night, Morgan Stanley upgraded its rating on the Saint-Gobain stock to buy ("outperform"), with the stock having fallen by over 10% in one month.
Previously the broker had a "weight in line" rating on the stock, although it trimmed its related target price from 49 euros to 47 euros.
Recently, the share of the French building materials group has been penalised by concerned about the building cycle in Europe, and figures reflecting a downturn in the trend on the construction market in France. Indeed, the share is currently trading at a discount of between 10% and 20% in terms of EV/EBITDA and P/E multiples, relative to cement manufacturers.
However, Morgan Stanley points out that Saint-Gobain has found a way out of the Sika case, and that it has a healthy balance sheet. In addition, the group is more diversified than the market seems to think: new construction in Europe only represents 26% of the group's expected EBITDA in 2018, while in the US, where the cycle is considered as "robust," represents 19%, and emerging regions 21%.
Finally, the rest of EBITDA is focused on building restoration in Europe, a segment which, after a period of weakness, has the potential for a rebound, Morgan Stanley says.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Previously the broker had a "weight in line" rating on the stock, although it trimmed its related target price from 49 euros to 47 euros.
Recently, the share of the French building materials group has been penalised by concerned about the building cycle in Europe, and figures reflecting a downturn in the trend on the construction market in France. Indeed, the share is currently trading at a discount of between 10% and 20% in terms of EV/EBITDA and P/E multiples, relative to cement manufacturers.
However, Morgan Stanley points out that Saint-Gobain has found a way out of the Sika case, and that it has a healthy balance sheet. In addition, the group is more diversified than the market seems to think: new construction in Europe only represents 26% of the group's expected EBITDA in 2018, while in the US, where the cycle is considered as "robust," represents 19%, and emerging regions 21%.
Finally, the rest of EBITDA is focused on building restoration in Europe, a segment which, after a period of weakness, has the potential for a rebound, Morgan Stanley says.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.