Michelin: Oddo BHF upgrades to buy.

(CercleFinance.com) - Oddo BHF has upgraded its rating on the Michelin stock from neutral to buy and has raised its target price to 140 euros (vs.
110 euros previously).

Oddo BHF explains in a report published this morning that the increase in its target price to 140 euros is due to the broker increasing its estimate for: i) a margin/underlying EBITDA to 12%, vs. 10% previously (average margin: 9.8% over 10 years and 11.7% over 5 years) and ii) sales growth of 3.0% vs. 2.0% previously.

Analysts add that over the past 10-15 years, Michelin has managed to improve its ROCE and FCF, although this has been at the detriment of its growth. The group's new plan places growth as a key priority, without sacrificing its gross margin. The group's renewed competitive nature will enable it to combine growth, improvements in its margins and a better control of capital employed.


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