Bernstein initiates coverage on Amrize stock with Outperform rating

Investing.com - Bernstein SocGen Group initiated coverage on Amrize Ltd (NYSE:AMRZ) with an Outperform rating and a price target of $62.00 on Thursday. The target represents a 21% upside from the current price of $51.29, though InvestingPro data indicates the stock is currently trading in overbought territory.

The research firm highlighted Amrize’s dominant position and exposure to structurally strong inland markets as key factors providing the company with superior pricing power. Bernstein noted that insulation from cheap imports and presence in consolidated markets, combined with a strong footprint along the Mississippi River, give Amrize pricing power and cost advantages that competitors would find difficult to replicate. With a market capitalization of $27.9 billion and robust current ratio of 2.0, the company maintains a strong financial position.Get exclusive access to more detailed financial insights and additional ProTips with InvestingPro.

Bernstein forecasts Amrize to grow sales at a 7.9% compound annual growth rate (CAGR) from 2024 to 2028, with 4.3% of that growth coming from pricing increases. The firm emphasized that Amrize has already demonstrated strong pricing power, raising cement prices at a 9.4% CAGR since 2021 and aggregate prices at 8.2%. The company currently generates annual revenue of $11.62 billion with a P/E ratio of 22.7x.

The research firm pointed out that approximately 75% of Amrize’s costs have been contracted to third parties, creating a high share of variable costs that makes production more flexible than generally perceived. This structure allows Amrize to reduce production when demand softens while maintaining pricing power.

Bernstein projects costs to grow at a 6% CAGR, which should lead to EBIT margin improvement of approximately 5.8% over the 2024-2028 period.

In other recent news, Amrize Ltd has been the focus of several analyst reports. Goldman Sachs initiated coverage with a Neutral rating and a price target of $57.00, noting the company’s strong market position in the cement industry and its strategic expansion in the roofing segment. However, they expressed concerns about slowing construction growth and challenging profitability in the cement sector. Berenberg also started coverage on Amrize with a Buy rating and a $64.00 price target, citing a robust mid-term profit outlook and Amrize’s strong balance sheet, which supports further mergers and acquisitions. The firm highlighted the company’s growth potential through its bolt-on acquisition strategy and robust pricing power. BofA Securities joined with a Neutral rating and a $56.00 price target, acknowledging Amrize’s strong fundamentals and significant merger and acquisition opportunities. Nonetheless, BofA Securities mentioned uncertainties in U.S. market volumes and noted that Amrize trades at a limited discount to its valuation methodology. These recent developments provide investors with varied perspectives on Amrize’s potential and challenges.

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