Analyst David Farrell from Jefferies maintained a Hold rating on Metso Outotec and keeping the price target at €12.60.
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David Farrell has given his Hold rating due to a combination of factors surrounding Metso Outotec’s strategic plans and market conditions. The company’s strategy, as outlined in their recent CMD, aims for significant revenue growth by FY30, leveraging favorable market conditions. However, the challenge lies in achieving margin improvements, particularly in highly competitive areas like pumps and HPGRs, which may hinder the company’s ability to expand its market share effectively.
Furthermore, while Metso Outotec targets a 7% top-line growth, the organic component is projected at 5-6%, with the remainder expected from mergers and acquisitions. This growth projection, though seemingly conservative, aligns with consensus estimates for the upcoming fiscal years. Additionally, the company’s goal to achieve an adjusted EBITA margin of over 18% by FY28 appears ambitious yet attainable, given the current consensus. These factors collectively contribute to the Hold rating, reflecting a balanced view of potential growth and existing challenges.
In another report released on September 24, Kepler Capital also maintained a Hold rating on the stock with a €11.00 price target.