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On Tuesday, Citi analyst Ephrem Ravi increased the price target for Thyssenkrupp AG (ETR:TKAG) (TKA:GR) (OTC: TYEKF) to €8.50, up from the previous €5.50, while keeping a Buy rating on the stock. The adjustment comes as Ravi notes potential significant changes to the company’s Enterprise Value due to strategic moves involving its Marine and steel businesses.
Ravi’s analysis suggests that the monetization of Thyssenkrupp’s Marine business and the planned sale of an additional 30% of its steel business could be transformative. This latter move might lead to the deconsolidation of associated pension liabilities. The analyst points out that Thyssenkrupp’s net cash position exceeds €4 billion, which is noteworthy, particularly since it surpasses the firm’s current market capitalization, despite the share price having doubled over the last six months.
The analyst believes that these factors are not yet fully reflected in Thyssenkrupp’s stock price. Ravi also mentioned the potential for a full "Sum of the Parts" (SoTP) valuation unlock, which could result in a share value of €12. The raised target price to €8.50 is based on this optimistic outlook, with Ravi highlighting the possibility of an IPO or sale of the Marine business as key upcoming catalysts. These segments have seen increased valuations in the context of a rally in European defense stocks, which could further influence Thyssenkrupp’s financial trajectory.
Thyssenkrupp’s strategic initiatives are part of the company’s broader restructuring efforts aimed at streamlining its operations and focusing on its more profitable divisions. The company’s progress in these areas will be closely watched by investors as they assess the potential impact on the stock’s performance.
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