Seco: Riding The Industrial Iot Wave: GS starts with 'buy'

ADVANTECH

10/06/2021 08:50

** Goldman Sachs initiates Italian high-tech group SECO
 IOT.MI  with "buy", saying the one-stop shop's strategy to
branch out into software should drive a mid/long-term positive
shift in its competitive/financial profile
    ** The group has "strong growth prospects", the brokerage
says, also expecting a gross margin improvement
    ** GS anticipates a 23% revenue CAGR through 2025, above
Internet of Things  IoT  market, to lead an increase in the
software mix to about 12% in 2025 from about 1% in 2020 
    ** Deleveraging and solid free cash flow generation should
allow M&A optionality, GS adds
    ** SECO's shares trade at a discount to its peer Advantech
 2395.TW , which GS says is "unjustified" given the group's
higher growth and profitability
    ** GS initiates SECO with a 12-month P/E-based target price
of EUR 5.2, implying about 40% upside
    

 ((Federica.urso@tr.com))