Jefferies ups GEA to 'buy' on mid-term earnings potential

GEA AG

19/06/2024 12:04

** Jefferies upgrades German food-processing equipment maker
GEA Group  G1AG.DE  to "buy" from "hold", expecting a rebound in
orders and higher mid-term earnings potential
    ** It says food and beverage end-markets, accounting for 70%
of GEA's business, have remained depressed for too long and are
now in need of equipment upgrades post the energy crisis
    ** It expects order intake to rebound to EUR 1.4-1.5 billion
($1.5-1.6 billion) a quarter by the year end, boosted by better
interest rate environment and dairy prices
    ** Higher rate of consolidation in dairy farming should
create better prospects for dairy market, where GEA's exposure
is about 30%, Jefferies adds
    ** "GEA is heading to its CMD with most of its Mission 2026
targets achieved, and could, thus, potentially announce new 2029
targets," it says about the event scheduled for Oct. 1-2
    ** It forecasts adj. EBITDA margin of 17-19% by 2029, while
consensus implies a flat margin of 15.5% beyond 2025
    ** Shares in GEA are up 2.5% in early afternoon trading

($1 = 0.9308 euros)

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