Barclays initiates Fuchs with 'overweight' on upbeat FY EBIT guidance

Fuchs Se

07/07/2023 10:50

** Barclays initiates coverage of German lubricant
manufacturer Fuchs  FPEn.DE  with "overweight" rating,
anticipating FY EBIT guidance upgrade and overdone concerns over
electric vehicles (EVs)
    ** The broker says the current consensus does not reflect
any benefits from raw materials further prices decline, which
puts it 9% ahead of company's FY EBIT guidance
    ** "A guidance upgrade, in an environment where a lot of
companies in our coverage are warning, could be a catalyst for
outperformance," Barclays adds
    ** Among other tailwinds the brokerage notes the end of the
2016-20 major investment programme, which has returned
capex/opex to a normalised level
    ** Barclays believes the concerns over the impact of EVs on
Fuchs are exaggerated since only about 10% of Fuchs EBIT is
ICE-specific and hence at risk, while EVs adoption requires more
advanced lubricants, presenting an opportunity for Fuchs 
    ** The broker concludes the risk-reward balance is
favourable as it sees downside potential of about 20% in a bear
scenario, while in bull case "share price could potentially
double"
    ** Shares in Fuchs are up about 2.2%
    ** Out of 13 analysts that cover Fuchs, 12 rate the stock
"strong buy"/"buy", and ​one analyst rates "hold" - Refinitiv
data

 (Reporting by Amir Orusov)
 ((Amir.orusov@thomsonreuters.com))