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On Thursday, Citi analyst James Perry adjusted the price target for Vidrala SA (BME:VID:SM) shares, bringing it down to €98 from the previous €99, while maintaining a Neutral rating on the stock. Perry’s commentary highlighted that Vidrala (LON:0NV7)’s first-quarter financial results met expectations, and the company’s guidance for EBITDA and free cash flow (FCF) aligned with consensus estimates, projecting over €450 million for EBITDA and over €200 million for FCF.
The analyst noted that Vidrala’s capital expenditure (capex) guidance appeared higher than anticipated at 12% of sales, compared to the consensus of 11% and a 10-year average of 9.9%. This is particularly notable as there are no major projects currently announced. Perry suggested that the company might be planning to accelerate the usual furnace replacements while market demand is below trend, which could impact short-term FCF but potentially improve cost competitiveness in the long run.
Perry also pointed out that Vidrala’s fundamentals should remain stable due to the company’s exposure to essential products, a forecast of lower energy costs, and the protection of its Iberian business from international trade barriers. Despite these positive aspects, the analyst expressed a cautious stance on the stock, citing the absence of a clear growth strategy and limited upside potential due to nearly full utilization. Additionally, Perry mentioned concerns about the stock’s higher valuation and investor crowding compared to its industry peers.
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