Covestro: Barclays raises target price

(CercleFinance.com) - Barclays reiterates its "Overweight" rating on Covestro shares, having increased its corresponding target price from 68 euros to 70 euros, after it raised its 2021-22 forecasts, judging the German Materials Chemistry Group's earnings potential as "underestimated".


"We believe EBITDA can remain stable next year despite the expected normalisation of spreads. Furthermore, our new bottom-up, asset-based analysis of normalised earnings shows this is the level that the company should at least be achieving across the cycle", the broker says.

"Given the strong valuation support - 5x EV/EBITDA and 11% FCF yield for 2021/22E, the cheapest stock we cover in the sector - we deem the risk/reward attractive", it adds.

The share is currently down over 1%, underperforming a slightly negative German market by about this amount.


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