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On Monday, BNP Paribas (OTC:BNPQY) Exane changed its stance on Interpump Group (BIT:ITPG) SpA (IP:IM) (OTC:IPGLF), lifting the stock rating from Neutral to Outperform and setting a price target of EUR37.00. Michele Baldelli, an analyst at the firm, noted that despite the stock’s significant underperformance compared to key indices since 2023 and a range of challenges including a cyclical slowdown, fiscal year 2024 results falling short, underwhelming 2025 guidance, and a deceleration in mergers and acquisitions activity, the risk/reward profile for Interpump Group now leans positively.
Baldelli explains that the market’s current view of Interpump Group has deteriorated due to recent events. However, he suggests that there is potential for a shift, with the possibility of substantial M&A activity on the horizon. The analyst believes that the stock has a downside risk of -30% but an upside potential of +90%, indicating a skewed risk/reward balance that favors the upside.
The valuation by BNP Paribas Exane takes into account an estimated -13% peak to trough earnings decline for Interpump Group from 2023 to 2025, which is considered moderate compared to the -31% earnings decline experienced during the 2009 crisis under the current scope of activities. This comparison suggests that Interpump Group might face less downside risk in a bear market scenario compared to its peers, who could experience a more significant earnings reduction.
Additionally, the analyst points out that Interpump Group is well-positioned to manage tariff risks due to its high pricing power businesses. This ability to handle potential tariffs effectively contributes to the upgraded outlook for the company’s stock.
In summary, the upgrade by BNP Paribas Exane reflects a belief that Interpump Group’s stock could rebound from its previous underperformance, with potential mergers and acquisitions acting as a catalyst for growth. The new price target of EUR37.00 represents an optimistic view of the company’s ability to navigate through the cyclical downturn and emerge with a stronger market position.
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