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On Thursday, Citi reaffirmed its positive stance on Prysmian SpA (BIT:PRY:IM) (OTC: PRYMY), maintaining a Buy rating with a price target of EUR69.00. The company, currently valued at $16.7 billion by market capitalization, has demonstrated strong fundamentals with a "GOOD" overall financial health score according to InvestingPro analysis. Citi’s analysis suggests the recent 6% drop in Prysmian’s share price following its Capital Markets Day was unwarranted, with the stock showing a notable decline of nearly 10% over the past week. The firm’s analyst, Vivek Midha, believes the current share price of EUR53 does not fully reflect the potential for improved profitability in Prysmian’s Encore division, nor does it account for the enhanced margin outlook for the Transmission division. This view aligns with current market analysis suggesting the stock may be undervalued based on InvestingPro’s Fair Value calculations.
Midha noted that despite the cautious long-term guidance, Prysmian experienced a robust recovery in the U.S. construction cables sector in March. The analyst expressed a preference for more detailed guidance but acknowledged the current outlook reduces long-term risks associated with construction cable margins. Citi anticipates Prysmian will exceed and elevate its financial targets over time, supported by the company’s strong revenue growth of 11% in the last twelve months and an attractive P/E ratio of 20.8 relative to its growth potential.
The report also touched on the postponed U.S. dual-listing of Prysmian shares, suggesting it remains a potential positive trigger for the stock later in the year once it proceeds. According to Citi, the market has not fully appreciated the promising prospects of Prysmian’s Transmission division.
Prysmian’s stock performance has been closely watched, with the latest commentary from Citi indicating confidence in the company’s ability to navigate through current market conditions and capitalize on future opportunities. Prysmian Group, headquartered in Milan, Italy, is a global leader in the energy and telecom cable systems industry.
In other recent news, Prysmian SpA has been upgraded by UBS analyst Christopher Leonard from a Neutral to a Buy rating, with a new price target set at EUR70. This upgrade follows a 17% decline in Prysmian shares since the company reported its fourth-quarter 2024 results and offered conservative guidance for 2025. UBS anticipates Prysmian’s earnings before interest, taxes, depreciation, and amortization (EBITDA) could reach between EUR2.8 billion and EUR2.9 billion by 2028, potentially rising to EUR3 billion with contributions from high voltage operations. The company has acknowledged overexpansion in Europe following the cancellation of a US facility, with these expansions expected to be operational before 2027. This could allow Prysmian to announce further capacity expansions at the upcoming Capital Markets Day. The transmission segment is projected as the main driver for EBITDA growth leading up to 2028. UBS also notes that European brownfield site expansions are expected to yield higher profit margins than those in the United States. Prysmian’s current trading at a 30% discount compared to its peers in the Electrification sector is highlighted as significant.
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