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On Monday, Citi analyst Vivek Midha adjusted the firm’s stance on Assa Abloy (OTC:ASAZY) shares, upgrading the rating from Sell to Neutral and setting a price target of SEK280.00. The revision reflects a change in perspective regarding the company’s growth potential, especially in the context of the US construction market. According to InvestingPro data, Assa Abloy, a prominent player in the Building Products industry with a market cap of $33.3 billion, maintains a "GOOD" overall financial health score, suggesting solid fundamentals despite market uncertainties.
Midha noted that the previous Sell rating was based on the belief that the market’s organic growth expectations were overly optimistic. However, since October, the forecast for organic growth has been reduced by half. For 2025, a +2.1% organic growth is now anticipated, with the Americas region expected to grow by +1.6%. The company’s current revenue growth of 6.5% and healthy gross profit margin of 41.8% demonstrate its operational efficiency. InvestingPro subscribers can access 6 additional key metrics and insights about the company’s growth trajectory.
Assa Abloy’s shares are currently trading around the SEK280 price target set by Citi. The valuation of the company, at approximately 14 times the estimated 2026 EV/EBITA, is considered by the analyst to be close to its historical trough multiple of 13 times. This valuation, combined with the company’s defensive characteristics, could make it more attractive to investors amid uncertain macroeconomic conditions.
Midha expressed that the previous concerns have been addressed, leading to the upgrade in the stock rating to Neutral. The analyst suggests that the defensive qualities of Assa Abloy may offer some appeal to investors, acknowledging the potential for upside risk to the company’s multiple. Citi’s revised view aligns with the current market positioning of Assa Abloy shares.
In other recent news, Assa Abloy has experienced a series of analyst adjustments and forecasts affecting its stock outlook. DNB Markets downgraded Assa Abloy from Buy to Hold, adjusting the price target to SEK345, citing concerns about U.S. market uncertainty and foreign exchange fluctuations. The analysts noted that these factors, along with challenges from mergers and acquisitions, could impact investor sentiment and the company’s profitability. Furthermore, DNB Markets revised its adjusted EBIT expectations for 2025 to 2027 downwards by 6% due to these external economic influences.
Similarly, Deutsche Bank (ETR:DBKGn) revised its price target for Assa Abloy to SEK310 while maintaining a Hold rating. This adjustment was influenced by a decrease in earnings per share estimates, attributed to negative foreign exchange movements and assumptions of more dilutive mergers and acquisitions. Deutsche Bank projects an adjusted EBIT margin of 14.8% for the upcoming first-quarter results, slightly below consensus expectations. The bank’s valuation is based on a multiple of 16 times enterprise value to EBITDA and 21 times price to earnings using 2025 estimates. Despite the lowered price target, Deutsche Bank continues to recommend holding the stock based on valuation considerations.
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