GEA Group rises after RBC upgrade on clear signs of market recovery

GEA AG

12/03/2024 07:55

** Shares in GEA Group  G1AG.DE  rise around 2% in early
Frankfurt trade after RBC raises the German food-processing
equipment maker to "outperform" from "underperform", seeing
clear signs of dairy and food market recovery by the end of the
year
    ** RBC raises its FY earnings estimates by 7-8% for 2025,
driven by volume and margin, as the dairy and food market is
expected to recover gradually by late 2024, according to the
broker
    ** The broker says the company's valuation looks highly
attractive at current levels, following GEA's de-rating over the
last 18 months
    ** It believes shares have significant potential for a
re-rating, given the confidence that the pro-active management
will keep adjusting capacities with good foresight and limited
earnings impact, as well as management's interest in returning
excess cash to shareholders
    ** "In our view, the near-term drop does not fundamentally
change the outlook for the business and should be seen as a
window of opportunity," RBC says, expecting 5-10% demand decline
in H1 2024, but adding this should stabilise by H2
    ** The stock seen at the top of Germany's mid-cap index
 .MDAXI 

 (Reporting by Ozan Ergenay)
 ((ozan.ergenay@thomsonreuters.com))