JPM sees European Capital Goods sector shifting towards quality from cyclical in 2025
06/12/2024 10:04
** J.P.Morgan sees the near-term outlook for European capital
goods companies more balanced, but has a selective view on the
sector in 2025, citing challenged valuation, elevated premium
** The brokerage says the sector profile has improved over
the past decade -- it is less cyclical, higher quality and with a
stronger relative growth opportunity
** It expects the sector to be a winner over the next 3-5
years, flagging, however, an increased level of macro uncertainty
** Its top 2025 picks include "overweight"-rated Andritz
ANDR.VI , Ashtead AHT.L , IMI IMI.L and Siemens SIEGn.DE ,
while stocks "to avoid" are Alfa Laval ALFA.ST and Wartila
WRT1V.HE , both "underweight"
** JPM upgrades health and safety device maker Halma HLMA.L
to "neutral," noting good H1 results, strong M&A execution, and
strong orders and margin performance
** Following Metso METSO.HE shares' underperformance versus
sector and peers, it raises the mining equipment company to
"overweight," seeing the right entry point and a positive set-up
for a recovery in 2025
** The broker downgrades lift and escalator company Schindler
SCHP.S to "underweight" on likely slow down in margin
progression, limited visibility into next step in the company's
equity
** JPM cuts valve maker Spirax SPX.L to "neutral," seeing
limited upside to the share price and further downgrades to 2025
forecasts in the near-term
COMPANY NEW RATING OLD RATING NEW PT OLD PT
Halma neutral underweight GBp 2,600 GBp 2,350
Metso overweight neutral EUR 11 EUR 10
Schindler underweight neutral CHF 245 CHF 235
Spirax Group neutral overweight GBp 7,800 GBp 9,300
Andritz overweight - EUR 76 -
Ashtead overweight - GBp 7,300 -
IMI overweight - GBp 2,250 -
Siemens overweight - EUR 230 -
Alfa Laval underweight - SEK 405 -
Wärtsilä underweight - EUR 14.5 -
(Reporting by Marta Frąckowiak)
((marta.frackowiak@thomsonreuters.com))