Berenberg lowers target price on Synthomer
Sharecast
Published Jan 12, 2024 10:16
Updated Jan 12, 2024 10:40
Berenberg lowers target price on Synthomer
Sharecast - Berenberg stated that cyclical stocks with high indebtedness "do not put investors at ease", noting that the more than 80% decline in Synthomer (LON:SYNTS) shares over the last 12 months was "a case in point". However, the German bank said it was "more optimistic".
"The firm has a leverage problem, although not a liquidity issue. Last year's £276.0m rights issue has bought time to recover," said Berenberg. "Construction market headwinds mean that the company will, in our view, show minimal progress in organically cutting its absolute net debt pile, even allowing for self-help."
Berenberg, which reiterated its 'buy' rating on the stock, noted that the moment a cyclical recovery, fast or slow, materialises, Synthomer shares should jump – perhaps as drastically as they have fallen.
"We have reduced our operating profit forecasts by a high-single-digit percentage on average for 2023-25, mainly reflecting lower construction-linked margins and volumes. Shares trade on 2025 price-to-earnings ratio of 4.2x, compared to long-run average of around 11.0x. Our price target would imply circa 9.0x," added Berenberg.
Reporting by Iain Gilbert at Sharecast.com
Read more on Sharecast.com
Get The App
Written By: Sharecast
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.