UBS ups Bilfinger to "buy", seeing much upside and improving risk-reward balance
29/06/2023 11:03
** UBS upgrades Bilfinger GBFG.DE to "buy" from "neutral",
sending the shares on their best day since May 2020, seeing much
upside to the German industrial services provider
** Brokerage points to favourable risk-reward balance, with
improving orders, industrial capex trends and demands for energy
efficiency and decarbonisation services
** Furthermore, the UBS flags that Bilfinger's share price
reversed its February rally, losing since its capital markets
day on Feb 14 until Wednesday close to one-tenth of its value
** The brokerage deems that the shares are pricing in a 4%
EBITA margin, thus ignoring the increase potential of 5% in 2024
and mid-term ambition of 6%-7%
** "A key component in the step-up between 2024 and 2023 is
the delivery of around €40m (net) cost savings (~100bps impact)"
it says, adding that end markets are more supportive
** UBS argues that margin improvement plans seem reasonably
credible, driven by cost reduction and reducing exposure to
riskier project works
** The brokerage expects the 2023 guidance to remain
unchanged, and focuses on FCF generation, which has been weak
over recent years, held back by low levels of profitability,
restructuring charges and working capital consumption
** Out of 7 analysts that cover Bilfinger, five rate the
stock "strong buy" or "buy", one analyst rates it "hold" and
one rates the stock "sell"
(Reporting by Tristan Veyet)
((Tristan.chabba@thomsonreuters.com))