GEA Group shares up, MS upgrades on higher margins and cash return potential

GEA AG

26/09/2024 07:47

** Shares in GEA Group  G1AG.DE  are up 2% in early
Frankfurt trade after Morgan Stanley raises the German
food-processing equipment maker to "overweight" from
"equal-weight"
    ** Broker sees cost savings driving higher margins and
further cash return
    ** It expects the company to increase mid-term margin
targets during the upcoming CMD in October
    ** It says consensus implies margins flatten out to 15.8% in
2026-27 but MS disagrees and sees EBITDA margins at 17% by 2027
    ** GEA's leverage in 2024 is relatively low despite existing
EUR 400 mln buyback programme, MS notes and models another EUR
400 mln across 2025-26
    ** The broker expects GEA's cash return to shareholders,
including dividend, of 5% in 2025 and 2026
    ** Still, with some of Gea's Dairy end markets near the
cyclical low point, the broker is cautious on a sharp rebound in
sales in future

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